Government tax collectors could rake in a further £20 billion per year if they matched the tax collection rates of local councils, the Local Government Association has warned.
The LGA said that uncollected tax was costing the equivalent of £1,370 for every household in England and Wales, calling on the government to commit to at last half the estimated £32 billion 'tax gap' by the end of 2015.
Cllr Sharon Taylor, chairwoman of the LGA's finance panel and Labour leader of Stevenage Borough Council in Hertfordshire, said: "If central government's collection rates were as good as those of councils, the public purse would be more than £20 billion better off.
"That's almost double the size of the total spending cuts announced in the Chancellor's spending round. When the taxman's balance sheet falls short, it takes a toll on public services across the board."
"Local government is the most efficient part of the public sector. Council tax has one of the highest collection rates of any tax. We cannot afford for local services like road maintenance, libraries and social care to continue paying the price of those who evade and avoid their tax liability. We all need government to do better in tackling this."
"Local authorities collect council tax from more than 22 million homes. If councils can obtain more than 97% of this, it is reasonable that Whitehall should be able to match this."
"Government has made positive noises on tackling unpaid tax. We now want to see a clear timetable which sets out how government will significantly improve their tax collection record."
An LGA spokesperson told the Huffington Post UK: "HMRC's attitude towards uncollected tax sounds rather defeatist."
But an HMRC spokesman said: "The LGA have fundamentally misunderstood the nature of the tax gap which is not a measure of tax unpaid.
"In fact HMRC already collects 99% of all taxes and duties which are collectible from a very wide customer base of 60 million taxpayers, increasing our tax take by £1.4 billion to £475.6 billion in the last year alone - on average we collect £1.3 billion a day for the UK."
The LGA's attack on HMRC's tax collection comes days after the government's tax collectors admitted that just one of the top 20 'most-wanted' tax dodgers had been caught.
The LGA's move was met with scepticism by accountants, who said the comparison between local and central government tax rates was a "political" attack that was "naive to the extreme".
David Heaton, tax partner at Baker Tilly and advisor to HMRC, told the Huffington Post UK: "I think the comparison is naive to the extreme."
"HMRC's tax gap is a whole mixed bag of problems, some of which aren’t real problems at all: taxpayers who haven’t paid on time but will do so feature in the estimates, but they are in a completely different league from those evaders who allegedly hide an estimated £6bn-7bn per year out of the £32bn claimed tax gap.
"Local authorities, by comparison, have a very easy life – if you don’t pay your council tax, they know where you live, unless you dodge the electoral roll completely."
"The LGA's argument is political. They're just trying to show that they’re being efficient, but they risk showing that they’re so good at their job that they’re probably getting too much resources. They could be falling into a trap."
Chas Roy-Chowdhury, head of tax at the Association of Chartered and Certified Accountants, said: "It's like comparing a horse to a cow, you're comparing two tax collection processes that are not the same".