or firms. Disambiguation Privatized tax collection Tax farming is not synonymous with modern privatized tax collection, where private individuals or companies collect taxes and pass them to the state in return for a commission or fee, without bearing any risk consequent of default by the taxpayer. Tax farming is speculative, meaning that the tenant of the farm bears the full risk of defaulted debts. In addition, a tenant is often required as a term of the lease to make an early rent payment, which must be financed from his own resources until the revenue stream subject to the farm has started to be collected. Factoring In the United Kingdom, some tax collection of "lower value debts" by HMRC has been outsourced to debt collection agencies from July 2010. However, debt collection agencies, like invoice factors, are not truly farmers of revenue streams, as they do not bear any risk of default. Rather they make loans in expectation of future receipts, such loans being always recoverable and secured on the income stream itself. Simple commutation In 1999 the National Board of Revenue in Bangladesh (NBR) negotiated with cigarette producing firms a minimum amount of Value Added Tax (VAT) that should be paid per month even though VAT is an ad valorem tax, that is to say of variable yield. The NBR took this step because under the self-clearance system monitoring of production and sales of cigarettes proved to be difficult. It was agreed that if the cigarette producing firms paid the minimum revenue fixed by the NBR, physical monitoring would be withdrawn. The NBR resorted to this technique of financial management to avoid the large costs of monitoring while gaining more in revenue with certainty. See also Fee farm grant Hollow state Maona Octroi Pacht: the system of tax farming in the Dutch East Indies Privatized tax collection Public-private partnership References Further reading Chowdhury, F. L. (2007), NBR's attempt at Tax Farming – fixed VAT on Cigarettes in 1999, Desh Prokashon, Dhaka. Levi, M. Of (1988), Rule and Revenue, California Series on Social Choice and Political Economy (13), University of California Press. Stella, P. (1992), Tax Farming: A Radical Solution for Developing Country Tax Problems? (September 1992). IMF Working Paper No. 92/70. External links Roman Taxes Public finance History of taxation Land tenure