Outsource! Privatize! Those two words appear to make up the bulk of the current Republican party’s economic plan. Voters are always promised the same thing when a new privatization scheme comes along: “private industry can do it better/cheaper/faster” than can government.

The state of Virginia decided to privatize its state income tax refund payments this year, with the typical promises. In a mostly party line vote on the state budget the state legislature included the requirement that

beginning January 1, 2013, the State Comptroller shall issue individual income tax refunds only through debit cards, direct deposits, or other electronic means unless the Tax Commissioner determines that a check is more appropriate for a transaction or class of transactions.

Virginia then contracted with a division of Xerox to provide MasterCard debit cards as a replacement for refund checks. Xerox agreed to provide the cards, issued through Comerica, “at no cost to the commonwealth,” but it reserved the right to charge card recipients/users a laundry list of fees. It didn’t take long for Virginia taxpayers to see that whether or not anyone was saving money from the new system, it certainly wasn’t them.

The Richmond Times-Dispatch reported in April that some users were being hit with fees for services that were supposed to be free.

Dell Cheatham of Prince William County said he tried to transfer money online from his card into his bank account but terminated the call because he was told there would be a $2 fee. He was charged $1 each for two calls he then made to customer service.

Other customers who were hit with fees for using the cards called Xerox to complain, and were then were also charged $1 per call fees for contacting customer service. Again from the Times-Dispatch

Steve Slater of Wytheville, who chose the debit card, said he tried to transfer his full refund amount to his bank account but was told there would be a $2 fee. He called customer service to complain — since card users get one free transfer — and he was charged $1 for making the call. He called again, because card holders are supposed to get two free calls a month to Way2Go representatives, only to get hit with another $1 fee. Slater said he was told the charges would be reversed in five days, but 10 days later, they still weren’t reversed and he called customer service once again. “I was told that my account had been reviewed and a decision reached that the charges would not be reversed.”

The Virginia debit card debacle is not the first time the state has moved to privatize some of the functions of the tax department. In 2011 the Virginia legislature and governor Bob McDonnell (R) replaced a free online state tax filing site with a new “Virginia Free File” system which was run by private vendors. Under the new system anyone who makes more than $58,000 a year has to pay to file.

There are privacy issues involved as well. Delegate Betsy Carr (D), who proposed legislation and a budget amendment to reinstate the option to receive a tax refund by check that was defeated, largely along party lines, earlier this year, expressed concerns about allowing private corporations to have access to sensitive taxpayer information. Carr observed

Where’s all this information going? [When] they become business records, rather than government records, and they’re not private.

Carr summed up her concerns: