He knows that is all moonshine and he will be made to look an impotent fool yet again.
What is exciting is that the Prime Minister is talking like a Tory again on tax: Britain cannot go on as a “bloated, high-taxing, welfare-heavy nation” and it was “morally wrong” for the Government to spend money “as if it grows on trees”.
Unfortunately his Chancellor George Osborne has spent the past four years doing just that.
He is adding £100billion a year to the national debt and performing the remarkable feat of doubling it in five years.
Osborne has borrowed money at twice the rate of Gordon Brown. Brown doubled the national debt over 13 years from £375billion to £750billion. Osborne has increased it from £750billion to £1.5trillion in just five.
Admittedly Brown’s legacy to Osborne was disastrous. Brown’s deputy at the Treasury Liam Byrne left a note on his desk for his coalition successor saying: “Dear Chief Secretary, I’m afraid there is no money. Good luck.” Full marks for honesty but Osborne carried on spending as though money does grow on trees.
In a sense it can as the Bank of England can simply print the stuff: £375billion has been magicked from nowhere and lent to the Government, which has since spent it. That is the economic “miracle” the Government boasts about.
The coalition has been too timid in cutting useless spending and getting better value for moneyThe economy is growing but tax receipts are growing more slowly. Public borrowing in the first half of 2014-15 was 10 per cent higher than last year.
In September alone borrowing was up 15 per cent on September 2013 while tax receipts were up only 3.1 per cent. If this is “austerity” why is the Government increasingly in the red?
First, the coalition has been too timid in cutting useless spending and getting better value for money. Second, taxes are too high and too complex.
Tax cuts are now a top priority to get the economy really moving. There are now 4.6 million people paying the higher rate of income tax compared with 1.35 million in 1988 when Nigel Lawson cut the top rate from 60 to 40 per cent.
Many of these people are not the millionaires that Labour’s propaganda suggests. A quarter of all teachers now pay tax at 40p in the pound along with a third of police officers and one in 10 nurses.
Similarly most of those caught by Labour’s “mansion tax” will be people on modest incomes, living in London and the South-east and subject to the mammoth increases in property prices.
Ed Miliband has recommitted Labour to the politics of envy, following French President Francois Hollande. To “soak the rich” he raised the top rate of income tax to 75 per cent leading to an exodus of professionals which is torpedoing the French economy.
It is not just rates of tax which are too high and start too low. Taxes are much too complex. Tolley’s Handbook, a leading compendium of tax law, increased in size from 4,998 pages in 1997 to 11,520 in 2011. The cost of understanding and navigating this labyrinth is a major drain on our economic potential. Much Government spending is vital but everyone knows the public sector is riddled with waste.
The NHS lost £12billion on a failed IT project to computerise records and new schools and hospitals are often put out to tender under the private finance initiative (PFI), with the successful bidder constructing the building and leasing it back to the state.
A scathing report by the National Audit Office found that in 2012 the taxpayer owed £121.4billion on PFI projects worth only £52.9billion.
MANY PFI deals also tie councils into expensive catering, cleaning and maintenance contracts, at a cost to the taxpayer of £229billion. Inept contracting led to one school being charged £320 for a plug socket.
The great 19th century Liberal chancellor William Gladstone believed in low taxes so that money would “fructify in the pockets of the people”. There is nothing moral about paying taxes only to have the Government pour your money down the drain.Perhaps Cameron has got the message at last: cut taxes and get the Government off our backs.
0 comments:
Post a Comment