The link between taxation & government spending, or the lack of it in some minds

To balance the UK books and to keep the money markets happy government spending must be funded by taxation and borrowing. When the money markets think it’s not balanced we end up in a Trussenomics mess, indeed a catastrophic mess.

The latest Tory wheeze is to cut Inheritance Tax, a tax cut that only benefits a very small percentage of the taxpaying public. The vast majority of us will never encounter it and maybe as little as 5% of us will actually pay IT. Yet this proposed tax cut is sold by Tories and their tame right-wing press so as to give the impression that it will benefit the many when it will only benefit the few.

Some of those supporting the cut, but not benefiting from it at all, fall for this political stunt. It would be more honest of the supporters of this move to say ‘put up my personal taxes instead because I don’t think Inheritance tax is fair’. I’d have more respect for them if they did because they seem to be living in a world where you can have something for nothing and decent public services whilst cutting taxes for the most wealthy.

Wrong-footing Labour

Of course, the proposed cut is also meant to wrong-foot Labour who don’t like to be seen as opposing a tax cuts so are muted in response despite such cuts putting them a worse financial mess if and when they do get control of the public finances.

Politicians have always tried to give the impression that taxes can be cut without any effect on public services and that’s one very big reason why our public services are in such an appalling state. For me Blair started the modern tax cuts/no tax rises with no consequences rot but he did so when the economy was booming so tax revenues remained high as we were doing reasonably well. But the grey man Starmer is in one hell of a hole because our economy is doing badly presently so tax revenues are not buoyant and we are borrowing to support public services and potentially even more tax cuts for the few!

It’s likely that the Tories are running the economy into the buffers, as they know they’ll lose the next election, so want it to be in a poor state thereby putting Labour in an impossible position. That’s why, in turn, Labour is backing off the very few pledges they have previously made and look more Tory by the day.

Electoral Reform

The Tory thinking will be ‘we know we’re going to take a hammering but when Labour fails to turn things around we’ll be back in business as voters will blame Starmer, Reeves and Streeting etc. for not sorting things out or seriously addressing problems such as the NHS and Social Care crisis’.

Trouble is Labour do know what’s going on but their leadership steadfastly refuses to support the only reasonable solution to having another slash and burn Tory government in 5 or 10 years’ time, electoral reform.

Decent public services

We’ll only ever have decent public services if they are funded properly, the workers in vital public services such as the NHS and Social Care are paid wages consistent with retaining them and we all accept that if we want something for nothing the consequence will be poor public services. All sounds very logical until some of us listen to lying politicians telling us we can have something for nothing and enough of us are fooled again!

The BBC

Another analogy, which follows the something for nothing line, is the TV License fee. Many who oppose it also complain that the BBC’s output is poor. A friend of mine point blank refuses to pay the License Fee and has done for years but continually complains about how bad BBC programmes are. It’s as though he does not see, or want to see, that without his contribution and that of others like him it all adds up to less money hence the poorer output! Yes, by all means suggest other ways of funding the BBC but don’t complain its output is poor when it is underfunded; that’s just daft.*

No such thing as something for nothing

The bottom line is the something for nothing line is simply nonsense, yet look at the Scandinavian countries that generally seem to get it right. Yes, their taxes are high (and so are their wages) but in the main they have high quality public services.

 

* I do have issues with the BBC’s news and current affairs output which, like the rest of its output, is clearly affected by an ever diminishing budget. But my issues are about its use of political balance which at times is bizarre. It’s as though they allow one extremist air time to say whatever nonsense they like but then try to get another opposing extremist to say just the opposite! How is that good news and current affairs output?