Guest essay by Eric Worrall
The British Government is reportedly considering tax rises of £30 billion+ to plug the hole in the government budget created by the Covid-19 lockdown.
My question – instead of punishing ordinary people by raising £30 billion of new taxes, why doesn’t the British Government plug their budget shortfall by cutting £30 billion of useless expenditure, by cancelling all subsidies for renewable energy, the foreign aid guarantee, and other assorted big government boondoggles?
Tax rises will be needed to deal with economic fallout from pandemic, government told
Chancellor Rishi Sunak may have to delay revenue-raising increases for two years to avoid stifling recovery
2 days ago
“Hefty” tax rises will be needed to deal with the economic aftermath of the coronavirus pandemic, but chancellor Rishi Sunak will have to delay as long as two years to introduce them to avoid choking off recovery, a respected thinktank has said.
And the director of the Institute for Fiscal Studies, Paul Johnson, said that Mr Sunak will have to hike rates of the most high-profile taxes, like income tax, national insurance and VAT, in order to raise the “really serious amounts of money” needed to fill the black hole in state finances.
Rises in levies paid by all would be politically perilous, as their impact would be felt in voters’ pockets just as Boris Johnson is preparing for the general election scheduled for 2024.
Reports that the chancellor is considering a £30bn tax raid in November’s Budget have sparked alarm among business leaders and MPs, with the British Chambers of Commerce warning that premature rises in corporation tax or capital gains levies could “hamstring” the recovery.
How much money would eliminating green subsidies save? According to the British government’s own figures, green subsidies and government imposed market distortions sucked £9.6 billion out of the British economy in 2019 – a future set to rise by around half a billion pounds per year until 2024.
Lets call that £10 billion – if the energy market was liberated from the green octopus, £10 billion would be put back into the pockets of ordinary people. Even if every penny of that money was clawed back as taxes, the government could raise £10 billion without adding to the tax burden of ordinary Britons.
What else can we cancel? The next obvious target is the International Development Bill, which guarantees recipients of foreign aid will receive at least 0.7% of Britain’s annual GDP. Given the British GDP was £2.2 trillion in 2019, this is serious money – around £15 billion. Cancelling all foreign aid, repealing the International Development Bill, would free an additional £15 billion for the UK government to spend on Covid-19.
£25 billion – just £5 billion short of our £30 billion target.
What other low hanging fruit can we pluck? You guessed it – the BBC.
The BBC license fee cost ordinary Britons £3.7 billion in 2019. By eliminating mandatory public funding for the BBC, ordinary Britons would be financially better off by £3.7 billion. Even if every penny of that £3.7 billion was clawed back as taxes, by cancelling the BBC license fee the British government could raise an additional £3.7 billion annual revenue without hurting ordinary taxpayers.
£28.7 billion raised towards the £30 billion target, without negatively impacting the tax burden of ordinary Britons.
I leave it to readers to find the final £1.3 billion. Given wasteful government projects like High Speed Rail HS2 or the insanely expensive Hinkley Point nuclear deal, it shouldn’t be too difficult to find a few extra billion to shave off wasteful government expenditure, to achieve my goal of finding cost savings which would allow the British government to plug the £30 billion Covid-19 expenditure hole in their budget, without imposing new pain on ordinary taxpayers.
via Watts Up With That?
September 2, 2020 at 08:51AM