Thursday, May 30, 2013

Happy Tax Freedom Day

A day later than last year but it has arrived. Allister Heath in City AM analyzes what that means:
For an average UK resident, the entirety of January, February, March and April, and virtually all of May, went on part-financing the state – the first 150 days of the year. It is only money earned from today that is retained by families to spend as they see fit.

The budget deficit is primarily a form of deferred taxation – and if the government were running a balanced budget, tax freedom day would actually fall on 13 July. As the economist Gabriel Stein argues, the government will spend the equivalent of all of the income generated by the economy for the first 196 days of the year. So much for the supposedly savage cuts to public spending from the coalition – and tragically, even though expenditure remains so high, parts of the public sector, including the NHS, are nearing crisis again. The system is bust, and needs radical structural change.
It always seems to me rather odd that whenever a tax cut is contemplated by people who believe on the basis of historic evidence that lower taxes help the economy to grow, there are immediate discussions as to where the missing money will have to come from. Which other tax is to be raised? Is it not time to start wondering why exactly does the government need all this money? What is it doing with it and should we be assuming that the government is the right organization to be doing all that is now assumed to be its responsibility. Again, historic and present data would indicate that it is not.

Allister Heath's article ends with the words:
Taxes are too high, and yet Britain’s welfare state is in crisis. We need to face up to this lethal dichotomy, and start to think the unthinkable.

No comments:

Post a Comment