George Osborne has been put in charge of cutting the national deficit, so how hard can it be to knock a few £’s here and there off the budget? Over the next 5 days I will attempt to lop a few billion off the UK national deficit. I am not an economist, nor hold any qualifications to allow me to be one. But how hard can it really be?
I will be tackling 5 massive and polarising issues in this series so feedback and debate is welcomed and encouraged!
Tuesday: Scrap International Aid
Wednesday: Withdraw Troops from Conflict
Thursday: Legalise Drugs and Prostitution
Friday: Cut Tax
Saturday: Leave the EU
Brainwave #2 Cut Tax
Amount raised: £Unknown
It is easy to tax the rich. Heck, it’s even easier to tax the poor. But just because something is available and easy to do, should we do it? If someone sitting near you on a train gets up to go and leaves their wallet on their chair would you not say anything and take it once they’ve gone or would you tell them they’ve left their wallet behind? It would be easy to say nothing, wait for them to go and then pocket their wallet. But it wouldn’t be the right thing to do.
Sure the UK could tax everyone in the country even higher than current levels, but it wouldn’t be the right thing to do for a number of reasons. Firstly, I believe it is quite immoral to tax anyone’s labour and time. The fruits of your labour, your wage, are not something that should be available to anyone else, George Osborne included. Unfortunately we do have income tax worldwide and I don’t see that changing in my lifetime.
Next we have the economic argument for why higher taxing will not increase income in the longer scheme of things. The more you tax something, the less desirable it becomes. Tobacco is a fine example of how tax can alter behaviour among citizens. Every year successive governments increase the excise duty on tobacco and cigarettes and every year more and more smokers are giving up the habit. This works with labour as well. The more you take from someone’s effort, the less effort they are likely to put into it. Less effort means less potential tax earnings for the exchequer.
So it may seem like a queer idea at first to lower tax to cut the deficit, but really it is quite a simple formula. In countries like Estonia where they have moved to a flat rate income tax system the Government has been collecting so much money, they have had to keep cutting tax each year. The current income tax rate in Estonia stands at 22%.
Boris Johnson is just one of many politicians and commentators who have called for the government to lower taxes to increase economic development and growth. Raising tax is just an easy way to cut the deficit in the short term. The government should be more visionary than that, looking at creative ways of expanding and growing our private economy while at the same time protecting essential services for all.
I won’t be adding a definitive figure on the total at the end because quite simply, to my knowledge, there isn’t a single economist out there who can truly predict the financial benefit of a tax cut. Instead I will add the knock on consequences of a tax cut, including increased jobs, further private investment and overall higher productivity. Tomorrow’s brainwave should go a long way in cutting the deficit and regaining economic and individual freedom.
It was government spending and borrowing that dragged us into this mess and it will be private investment and enterprise that will lead us out.
Total Deficit Cut So Far: £17.7billion (+increased work force, + the end of British soldiers injured and killed, + 1000’s of new jobs, + increased tourism, + even more jobs, + further private investment, + higher productivity)
Please feel free to leave abuse/ constructive criticism/ support, and I hope you get the opportunity to read tomorrow’s deficit busting brainwave #1!
Written for Political Pundits
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