Coffee House

Reagan, Keynes, Question Time and tax cuts

15 February 2013

12:18 AM

15 February 2013

12:18 AM

I was on the panel of BBC Question Time this evening, in Leicester. Ed Balls’ tricksy 10p tax proposal was raised, and I raised my reservation: it does very little for the low-paid. Balls says £2 a week, but Policy Exchange showed earlier how benefit withdrawal makes this a derisory 67p a week. And  this is the best the Labour Party could do to help the low paid? There should, I suggested, be a significant tax cut for the low-paid. That is to say: the equivalent of one extra month’s salary a year. So how, David Dimbleby asked, would this be funded? Any which way, I replied: it could be by finding greater savings in the still-gargantuan government budget. And, if needs be, by temporarily extending the deficit. There followed the immediate accusation that I was a Keynesian.

To me, it’s basic economics: if you cut taxes enough, the economy will grow in response. The question is whether the response will cover the cost of the tax cuts.  And if it doesn’t, what savings you can make in the government budget


When the Swedish Conservative government cut taxes for the low-paid, in response to the crisis, they found more people moved from welfare to work. So welfare bills fell and tax receipts rose. So Sweden’s tax cut paid for itself. Does that make Anders Borg, Sweden’s ponytailed supply-side finance minister, a Keynesian? Or just someone who has a clue about economics, and wants to apply a mixture of methods to grow the economy?

I only raise this because George Osborne has his own label to reject this: Reaganite. His analysis — a jargon hangover from the 2005 Tory wars — is that David Davis and his allies were swivel-eyed un-British ‘Reaganites’ because they believed in the concept of self-financing tax cuts. (Reagan’s strategy was to stave the beast, cut taxes and shrink government that way.) Danny Finkelstein developed this theme further, calling it “punk tax-cutting”. So those who ask Osborne to cut taxes now are dismissed as Reaganite punk tax cutters, etc. It was a clever attack line for 2005, but seems to have congealed into an economic policy and led Osborne to reject out of hand the tools which other countries have been using to spur growth. (In Sweden, Borg has followed up with a major deficit-financed corporation tax cut.)

Anyway, here is Osborne offering his ‘Reaganite’ definition in the 2011 Spectator Christmas special:

“I am a fiscal Conservative, I’m not a Reaganite deficit-funded tax cutter. I am actually in that sense more the model that Margaret Thatcher and Nigel Lawson pursued. That means sorting out the public finances – and if there is a surplus, then use that to reduce taxes. That’s what he did in the late 80s.”

Problem is, there won’t be a surplus — not under Osborne’s plans, anyway. They now run to 2016/17 and there are deficits as far as the eye can see. While Osborne is seemingly appalled at the idea of deficit-financed tax cuts, he seems relaxed with deficit-financed spending. (Only the former, by his definition, threaten ‘stability’ and ‘sound money’. And QE poses no threat to the latter, apparently).

There was a question tonight about how all parties are the same, and it’s becoming depressingly true for economic policy. Osborne is now “dealing with the debt” by increasing it by 60pc from 2010-15, precisely as Labour planned. Like Brown, he seems to regard tax cuts as a reward for good behaviour rather than a basic tool to spur growth. Like Brown he has faith in QE and artificially cheap debt, and is relaxed about the resulting inflation. Like Brown, he uses five-year plans which deny him manoeuvrability. Like Brown, he has no plan to balance the books. I’m not quite sure how those of us who opposed Labour’s plans can be expected to cheer Osborne now, given the similarity of both methods and (alas) outcomes.

There is another way, and it was indeed outlined long ago by an American president. But it wasn’t Reagan. In 1962, JFK had this to say:

‘Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget — just as it will never produce enough jobs or enough profits…

‘In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.’

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Show comments
  • Barbara Stevens

    Question Time as become boring. Its panels not very intelectual at all, MPs are the most boring. I’ve thought for a long time people from all walks of life would liven the show up and be more genuine, pehaps they should be on the show. Of course changing the presenter to one who does not interrupt while panelists are giving their answers would be nice. His constant interuptions spoil the show, and one begins to think he’s interviewing himself. I’ve noticed most presenters are like that now. What we have now is the same old faces revolving round the country, is it that people don’t want to come on now? Perhaps C Mustard would so the honours that might liven things up with sensible debate.

  • Mike Barnes

    The debt:gdp of the USA exploded under Reagan though.

    Apart from that, yeah what a great time the 80s were…

    for CEOs and Wall Street.

  • Jon Mitchell

    Politics can be summed up thus: a glazier who during the night sneaks around smashing windows. The common perception of the role of the politician is to represent the electorate and to solve social, political and economic problems. What most people don’t realize is that those same people are actively causing the problems that they are paid to solve.

    Further, shame and guilt are twins. Without a sense of guilt there is no shame. Politicians’ lack of shame is because they genuinely think they are guiltless of any wrongdoing, ie. they are amoral. Hence absolute power corrupts absolutely.

    Take Cameron and many of his colleagues in government. He is very keen to say how shameful it is for companies and individuals to try, quite legally, to reduce their tax bills, and yet the incredible shame that many of us would feel if we had been caught cynically and deliberately stealing from others is not felt by many of the MPs who are entirely unrepentant about having fiddled their expenses and are quite determined that no proper controls should be put into effect to stop them stealing yet again.

    The fact is MP’s are conditioned to never be wrong because of the political game they play, and the game is called party politics. This is perhaps the single biggest downside to having political parties. Members are whipped to vote against their own judgment under threat of being cast out from the party. Even the candidates at elections have to sign their pact with the devil so we never end up with a choice of conscientious men to vote for.

    A new system should be imposed. One where a government is formed by like minded people …. which is arguably what we’re supposed to have already. Politics is as relevant and important as ever – however, it’s the political parties in Westminster that are outdated and irrelevant.

  • itdoesntaddup

    The key here is the true effective tax rate – which necessarily takes account of benefit withdrawal. It should be further modified by considering the additional costs of travel to work, and of childcare. Either increasing personal allowances for everyone, or nearly everyone (via the 10p rate band), fails to concentrate the incentives to work where they are most needed: those caught in benefit traps. I think IDS gets it: Lib Dems and Labour certainly don’t.

    Part of the solution may be devising ways in which some benefits are made less generous. This need not necessarily be at the expense of the notional benefit recipient: Housing Landlord Benefit being an obvious case in point.

  • kyalami

    I suggested this about the price of petrol and diesel two years ago.

    In essence I said cut the taxes by 50p a litre to give the economy a shot in the arm.Transport affects the price of everything: companies would be more profitable (paying more taxes), so companies would employ more people (who would pay tax and NI rather than claim benefits) and so on.

    Instead, this government like the two before it keep increasing fuel duties.

  • jack mustard

    If we are going to adopt JFK’s approach to economics, then let’s not forget: he proposed a top rate of income tax of 65% and his tax cuts would be funded through deficits rather than spending cuts. He was also sensitive to the fact that he was elected by a small margin in 1960 – so did not wish to implement radical or controversial economic policy without first obtaining a stronger mandate. It is now almost 21 years since the Tory’s won anything like a mandate…

    • Colonel Mustard

      Oh, they got a mandate in 2010 alright. 36% of the votes for 47% of the seats whilst Labour with 29% of the vote won 39% of the seats.

      I know it is hard for you people to accept, but the Tories won. They got more votes (and overwhelmingly so in England). That is how it works. This other Labour myth – that “no one won” – is more tripe.

      It was close but only because Labour had 13 years to brainwash a new generation of voters, import a whole new electorate and stuff the public sector and NGOs with even more fellow travellers.

      Even if you lot win in 2015, which is by no means a certainty, there will be an anti-Labour insurgency – and a more determined one. You might be able to take power but you will never be able to make all the public conform to your views, however much English liberty is and undermined. As champions of diversity you ought to be able to accept and respect that.

      Here it is again. There is no special right for Labour to rule – you will never command everyone.

      • jack mustard

        In other words 64% – almost two thirds of the electorate – didn’t vote for the Tories. While I agree that Labour lost the last election – indeed, was heavily defeated – I don’t know how you can claim the Tories “won” or have a mandate for their programme. They have the most seats, but do not have a majority; that is why they are in a coalition.

        JFK won the US Presidency in 1960. However, he recognised that the electorate was deeply divided and believed that he would need a stronger mandate before implementing policies he accepted were controversial.

        I agree that Labour has no special right to rule. I also agree that not everyone will conform to my views, or those of a future Labour government. I accept and value diversity – in all its forms.

        • Fergus Pickering

          When was the last time a government was in with a majority of the votes? Would it be 1945?

          • jack mustard

            That would be a Labour government, I guess.

  • Archimedes

    Oh, and if this deficit you’re proposing is financed by either QE, or domestic market lending, then exactly the same amount of money will be removed from private investment as is injected via tax cuts. There is no reason to assume that it will be growth enhancing given the UKs current predicament. Under other circumstances, perhaps it would be.

  • Archimedes

    Starving the beast never worked in the US, and it would be less likely to work in the UK. Osborne, and Lawson, is spot on: you find the money first, and then you cut the rates. Yours is the labour approach of putting everything off until later in the magical promise that a solution will somehow present itself at the 11th hour. Borg is tax-cutter in the same vein, and were he running the UK economy I seriously doubt that he would attempt to finance tax cuts with an increase in the deficit. The beast has already been starved, but with excess spending, and now spending needs to be reduced so that we can maintain our current tax rates. There is no scope for overall tax cuts, only for moving rates around.

  • John Smith

    The Mansion Tax is a winner and will appear near you, soon.
    Its income tax that needs to be removed

  • Chris lancashire

    Like many well-meaning, metropolitan theorisers your proposal falls at the first fence out here in the real world. Cutting “low paid” taxes by the equivalent of one month’s salary is £1000 – or £2.73 a day. Nice to have but as long as the plethora of benefits exist – housing benefit, child benefit, council tax relief as well as unemployment benefit (not to mention the odd cash-in-hand job or drug deal) then there is not a chance of your policy having any real impact – at least in this corner of “deprived” UK.
    And there is absolutely no government of any colour that is going to tackle that.

  • Paul Danon

    Shome mishtake with “stave the beast”?

  • McRobbie

    I turned off the TV when I saw galloway the mouth was on the panel.

    • HooksLaw

      Galloway is a fraud and a con.
      From the tip of his shiny shoes to the top of his neatly quaffed head, from the gloss of the carefully cultivated beard to the dandified coat collar. A fraud. And the BBC cannot get enough of him.

      • Fergus Pickering

        Isn’t h a muslim now or did I just dream that? I suppose it’s the four wives that is so attractive.

  • Tom Tom

    I do not understand this political insult “Keynesian”. Is it referring to Joan Robinson and Nicky Kaldor because it certainly cannot mean Keynes himself. Keynes Treatise on Money shows he was well aware of Inflation and his General Theory says nothing more than the Government accelerating Purchases of Goods and Services to keep Confidence high rather than cancelling orders for Warships (as happened in the 1920s and 1930s) and funding projects as Chamberlain as Chancellor did after 1935 – funding Rolls-Royce engines and Shadow Factories in Crewe, Industrial Parks like Trafford Park, and underwriting Radar and other Defence matters like Hawker Hurricanes and 4–engined Avro bombers.

    How Keynesian came to be an abusive term for Unfunded Spending is unclear but probably has more to do with John Hicks and Joan Robinson and the Cambridge School around Kaldor. Certainly the Second War was wholly unfunded as Churchill splurged and mortgaged the future – well into the 1970s. North Sea Oil was the only addition to UK wealth that prevented us from experiencing this collapse much earlier.

    The truth is that Living Standards must fall by 30%-50% to reflect Britain’s standing in the world. The Ruling Elites are busy feathering their own nests hoping people do not notice they are getting steadily and inexorably poorer. Rather than Downton Abbey people should watch the B&W Forsythe Saga, Upstairs Downstairs or even “Sam” to see how their lives will look in future. ALL Politicians are in La-La Land. The situation cannot be tweaked….it is one of History’s Turning Points – the Collapse of a Civilisation

  • Colonel Mustard

    Well, I watched it much to the detriment of my health but apart from when you spoke it seemed to consist of 60 minutes of “Blame the Tories, blame the Tories, blame the Tories”.

    • UlyssesReturns

      Not alleviated much by the piss-poor performance of the so-called tory Maria Miller. Even that awful libtard Susan Kramer outshone her when defending the government’s back-to-work programme. Question Time has become the propaganda arm of the labour party – perhaps the new BBC (impartial) appointee Purnell can take over from Dimbleby who can then take his ore-destined place between Vince Cable and Milloiband in the next libtard-labtard coalition government.

      For once Mr Fraser is quite right – it matters not now what the markets think and what happens to our AAA rating – growth is anaemic at best and the only chance to get us out of the Japan-style morass is to cut taxes, slash spending and go all out for growth. One may as well wait for Godot or put one’s trust in the juvenile economic fantasies of Balls and Milliband than expect Cameron and Osborne to grasp this. Useless, useless, useless.

      • Colonel Mustard

        Yes, I agree she was really bad. Even with sympathy I found her arguments utterly unconvincing and she lacked any real determination to counter the Tory detractors. I find it fantastic that all the bad things emerging from 13 years of a Labour government with a healthy majority are still blamed on a pre-1997 Tory government and yet here we are, not yet three years into Coalition and the Tories are blamed again. And of course we get the Blair not really being Labour argument to excuse themselves from responsibility. It really is a religious faith cult with Labour activists and supporters, where they believe they do no wrong and the Tories do no right, with Balls et al as prophet/messiah/saint figures assessed without question on their boasted intentions or pronouncements rather than their actual achievements The latest and most pernicious myth now peddled being that recovery was on the way before the Tories stepped in.

        One need look no further than telemachus for the mindset. He demonstrates it perfectly. Utterly pig-headed, immune to reality, just trotting out platitudes and boasts and then, when challenged, dodging and moving on to another slogan. He personifies the Labour party and their supporters.

        • telemachus

          Blair’s decision to remove ‘common ownership’ from Labour’s
          constitution made hay with the revanchists and met with whole hearted approval from a group of intellectuals and politicians for whom it was the final victory

          However their attempts ‘modernise’ socialism by removing from it any notion of a transformation of selfish Thatcherite society derailed our great nation from its quest initiated at Magna Carta for egalitarianism. The country began to get back on track when Blair retired to support Israel only to be derailed again by the false glamour of the posh boys.

          The electorate is about to wake up

          • Nicholas chuzzlewit

            Ladies and gentlemen of the Telemachus team, thank you as always for your zany and amusing contribution – pythonesque in its flights of fancy.You brighten our days with your matchless combination of charming mendacity and purblind stupidity. Well done.
            I disagree with just about everything Tony Blair did or said but he did make Labour electable on three occasions and you can only do that when the majority of the population believes you are offering a ‘middle ground’ group of policies. The moment he was ousted in a political coup sponsored by Brown the wheels came off the wagon and Labour became unelectable and devoid of any sensible policies. Your party is now led by a Marxist teenager who lacks sense, ideas and credibility and who owes his small lead in the polls to the fact that the present government is pretending to do unpopular things. Heaven help them if they actually tried to cut government spending.
            Playing games with the 10p tax rate is at once both desperate and utterly dishonest – the mark of the utterly amoral Ed Balls. The ‘Mansion tax’ would not simply crucify all those ‘Toffs’ you hate so much but would destroy the residential property market in its entirety. That is because it is a wholly connected market and you cannot isolate one section of it whose participants you happen to dislike. That said, having destroyed the best funded private pension arrangements in the whole of Europe there would be a ghastly symetry in destroying the residential property market as well.
            In summary,you talk of egalitarianism but all this really means is a promise of economic failure, personal failure, mediocrity and state dependency. .

          • Colonel Mustard

            I think the electorate is waking up to the reality of Euro-socialism. Next year the awakening will be even ruder.

          • Tom Tom

            Magna Carta was signed by BARONS and was revoked by King John

          • John McClane

            You are seriously nuts, tm. Your comments on any topic bear no connection to the real world. Why don’t you go and run a blog or something. Find some quiet corner of the internet where you can talk to yourself.

        • jack mustard

          The Coalition inherited a growing economy. There were five consecutive quarters of growth between Q2 2009 and Q3 2010. Osborne wiped that out – we’ve had five quarters of decline and only 4 quarters of growth since.

          • HooksLaw

            The coalition inherited a good old pre election boom paid for with a torrent of borrowed money. It also inherited crippled banks and an economy incapable of sustaining labours bloated spending.

            But since then unemployment has fallen and employment has increased.

            In case you are blind deaf and dumb the German economy fell into a -0.6% recession last quarter.

            • jack mustard

              Unemployment is falling, but it is still at a higher rate than when the coalition came to power. Many of the jobs that have been created are part-time, low-paid, taxpayer subsidised – so we are moving from a crisis of unemployment to a crisis of underemployment. We are spending more on benefits than ever. The UK deficit is now increasing. We should let Mrs Merkel worry about the German economy; the coalition is responsible for the UK’s economy and it is failing to improve it.

              • kyalami

                Pretty much everything in your post above is wrong. Jobs are being created in the private sector, rather than in the public sector (which is what happened under Labour). Spending on benefits is going down as more people enter work and less benefit money is wasted. The UK deficit is decreasing. German economy shrank last quarter.

                Try working with the facts, if you can bear it.

                • jack mustard

                  You fail to provide any evidence for your assertions. However, in response to the points you make: (i) The UK deficit fell, but is increasing again ( (ii) Spending on benefits in 2011/12 was £159bn – an increase of 1.1% on the previous year (spending increased 5.2% on housing benefit; by 3.3% on disability living allowance; by 7.6% on Jobseeker’s allowance) and spending is forecast to increase to £166bn during the current financial year. (iii) The OBR has suggested that about half the new jobs created are part-time or self-employed; many of these people will be claiming tax credits and housing benefit to supplement their incomes. (iv) I didn’t dispute that the German economy declined in the last quarter; but if you are suggesting that justifies the state of the UK economy then it follows you let Labour off the hook for what happened from 2008-10 because the UK recession coincided with an international financial crisis. Try working with those facts.

                • Fergus Pickering

                  And again. With funny old figures this time.

                • jack mustard

                  Why does the truth hurt?

              • Fergus Pickering

                There you go again.

              • John McClane

                Many of the jobs created under Labour were full-time. highly-paid & 100% tax payer-funded, because they were non-jobs in the Civil Service. It’s those jobs that should go.

                • jack mustard

                  Please don’t let these facts disappoint you: in 1992, 23.1% of all jobs were in the public sector; in 1997, 19.6% of all jobs were in the public sector; in 2008, 19.7% of all jobs were in the public sector. Since 2010, the coalition has had great success in reducing the number of public sector employees; however, despite the job cuts and the pay freeze, it has manged to increase the public sector pay bill. And still there is no improvement in the economy.

          • kyalami

            The coalition inherited the largest peacetime debt since the time of Henry VIII – so bad that we spend more on INTEREST alone than on police and education combined. Brown ravaged the economy.

            • jack mustard

              Entering the 2008 international banking crash, UK debt and deficit levels were broadly as they were in 1997 when Labour came to power. Right up to the crash time George Osborne was promising to match Labour’s spending plans. There is no doubt that our economy was ravaged by the recession – however, it was recovering when the Coalition came to power; the recovery stopped when the Coalition’s policies took effect.

              • Tom Tom

                There is no doubt Brown stored up huge Contingent Liabilities no matter what snapshot figures may have indicated in 2008. The loss of gold reserves and the expansion of bank credit to levels greater than GDP were a nuclear time-bomb. Essentially RBS was underwriting Russian Oligarchs through ABN-AMRO and there was no Liquidity in the system because it was all hypothecated and only The Central Bank could expand its balance sheet – the Bank of England has expanded its Balance Sheet more than the Fed or ECB so it is hard to know how it will ever be solvent since LIabilities exceed the Entire Asset Base of the United Kingdom

              • Fergus Pickering

                Keep digging, old fruit.

                • jack mustard

                  Why, are you looking to save on grave-digging fees, old fella?

              • Grrr8

                Your point on Osborne and Labours spending plans is spot on and should be used by Labour much more.

            • Tom Tom

              Please explain how it is the highest since Henry VIII since the National Debt was not created until 1694.

          • Colonel Mustard

            Yes, that’s the one, thanks. Has it been scripted by Labour HQ? You are all peddling the same line.

            • jack mustard

              Nicholas, I note you don’t dispute that the Coalition inherited a growing economy, and that its policies have failed to deliver any improvement.

          • Fergus Pickering

            Jack, old chap, do you ever look over the Channel? No of course you don’t.

        • 2trueblue

          The fault lies with the appalling standard of reporting on the BBC and the like. Throughout the day the BBC feed negativity re the current government. They give room and time to the available rent-a-mouths that Liebore provide continually. The BBC and also Sky rarely challenge the ‘rent-a-mouths’ with any intelligent questions, they do not know their subject, have no real fats and have done no research.

          Little surprise in that when one realises that that their information comes straight off the pages of the Gaurdian, which would not exist if the BBC did not buy it.

          We are now seeing the results of Liebores gross negligence during their 13yrs as scandal after scandal comes to the fore which have got their roots firmly in that 13yrs. All that time we heard about initiative, initiatives.

          Andrew Neil is the only one who bothers to earn his salary by being in possession of any of the facts, and challenges any of them. Compare him with the vacuous Dumbleby!

    • HooksLaw

      A typical BBC question time with once again a barrel load of free publicity given to the rabble rouser Galloway.
      Nelson failed in his fist duty in shutting him up. he failed in is second duty of reminding all the ones demanding more benefits that benefits are a charity not a right, they depend on the givers ability to pay.

      • Makroon

        Question Time is about as relevant as the Daily Mirror or the Archers.
        A rickety little stage for minor celebs and wannabe politicos, and another BBC sinecure for the Dimblebee clan.
        Which category does Fraser fit into ?

    • Andy

      Twas ever thus. It should, of course, be ‘Blame Labour, Blame Labour, Blame Labour’. It was Labour that ruined the economy.

    • 2trueblue

      Dumbley runs it for Liebore. He very cleverly gives the left the last word, always to anyone on the left. Anyone on the right is manipulated by being asked early what their view is and the this gives Liebore the opportunity to reply knowing there will be no rebuttal.

      That said last night was awful, totally behind the curve. Only one person stated the obvious about the ‘girl from Poundland’, the girl failed to get a job in her chosen area, and is now working in a supermarket……. and that was from a member of the public, stating the obvious. That is what was wrong with Liebores idea that over 50% should go to university. No problem with that if the degree can get you a job..

      The only real political interviewer is Andrew Neil. He gives no one an easy ride, knows his subject, is up to date, unlike most others in the media,

    • Barbara Stevens

      I’ve suggested above you would do much better than most who appear, what do you think?

  • lgrundy

    “I’m not quite sure how those of us who opposed Labour’s plans can be expected to cheer Osborne now.”
    We don’t.

  • Daniel Maris

    I don’t think there’s any evidence Reagan – during his two terms – cut taxes, increased tax revenue and cut government spending. I think he was part of the Chinese Bubble: cheap imports, high credit, low taxes, debt-funded government expenditure.

    If you have any evidence to the contrary – let us know!

    • Curnonsky

      Reagan did cut taxes, the economy revived, employment rose as did tax revenues. But Tip O’Neill, the corrupt Democratic leader of Congress with whom he fashioned his deal to lower taxes and cut government spending reneged on his end of the bargain and refused to countenance any spending cuts whatsoever. Result, growth and debt.

      Osborne, in his wisdom, has emulated the bad part of that bargain (spending) and ignored the good (tax cuts). Result, recession and debt.

      • HooksLaw

        How can you say the government is not cutting the spending that is discretionary? It is. Hundreds of thousand of public sector jobs are being cut.

        • John McClane


    • Tom Tom

      Not China – Japan. It was Clinton that gave China MFN Status not Reagan. Reagan simply created the S&L Bubble and needed the Louvre Accord

  • Noa

    A good appearance tonight Fraser. Points well made.

  • Youbian

    You are correct Fraser. The government should cut taxes immediately yo stimulate the economy and stop the mansion tax idea as well. It won’t be needed if taxes stimulate the economy thank God.

    • Daniel Maris

      Well, the good thing about that comment is that you are referencing God – because that policy needs all the help it can get.

    • Tom Tom

      Cannot do it now – Currency Vigilantes would trash Sterling

  • Daniel Maris

    Enough of the Swedish Fraser! Until you admit that the Swedish tax take is hugely more than in the UK – by about 25% I think last time I looked – then I really can’t be bothered to listen to your “Swedish” policy. They were cutting from a much higher tax base. It may well be that cuts from that higher base don’t produce the sorts of economic anxiety that proved so fatal to our economy in 2010-11 in response to the Idiot Osborne’s “Austerity Oratory”.

    • Fraser Nelson

      Swedish spending/GDP now lower than ours

      • Daniel Maris

        Spending is not taxing. The issue at hand is taxation. However, if you’d like to give a reference that would be nice.

        • Archimedes

          Spending is taxation. Where do you think the money for spending beyond revenues comes from? It’s just taxation by the back door.

          • HooksLaw

            Spending is the sum of taxing and borrowing. Well at least it is under a labour regime.

            • jack mustard

              And under Tory Regimes. Labour governments posted more balanced budgets than Tory Governments since WWII.

            • Daniel Maris

              No it’s the sum of revenue plus borrowing. There are many governments around the world that gain income from state owned utilities for instance. Or a government might sell of old military equipment. Or it has properties that it rents out. Prudent governments that have developed Sovereign Wealth Funds are of course getting revenue from investments. Revenue is not just taxation.

          • Daniel Maris

            Governments get revenue from lots of different sources other than taxation e.g. rents, charges, sale of goods and services, and so on. Spending is equivalent to revenue plus borrowing. It isn’t equivalent to taxation.

            • Archimedes

              Of course spending is equivalent to taxation. If spending rises, regardless of tax rates, a larger portion of the economy is occupied filling governments functions. If tax is not the portion of the economy agreed by the citizens of that state for the fulfilment of the functions of government then what is it? If the state exceeds that share of the economy, then what is it doing is increasing its share of the economy, and thereby reducing the resources available for filling that in the private sector that might yield a capacity for an increase in private consumption. Spending is the same as taxation because it inherently means that the government is using a larger share of the..

              I’m writing this on an iPhone and it has become rather tiresome so ill stop there.

              • Daniel Maris

                Sell there’s stupid and there’s especially stupid – as in when someone tries to redefine “taxation” to mean “revenue”.

                The crucial element in taxation is compulsion. Everyone is supposed to pay tax on their income if the government says so. Not everyone has to pay rent on government land. Not everyone has to buy a decommissioned battle cruiser. Not everyone has to buy an office block that the government decides to sell. Not everyone has to buy telephone services from a government telecom company.

                If you can’t appreciate the difference, that’s your problem not mine.

                • Archimedes

                  I didn’t try to redefine taxation as revenue. I did try to point out that taxation and spending are equivalent. I set that argument out. Tax meaning burden, like “taxing”, I have no need to redefine it.

                  Don’t worry Daniel – one day you’ll grow up. I saw it in a film once.

      • Daniel Maris

        These latest figures for 2012 suggest Sweden’s total tax take is 48% compared with the UK’s 39%. So Sweden’s tax take is about 22% or thereabouts higher than ours – a very substantial difference. Fraser – are you arguing we should hike up our tax take?


        • Daniel Maris

          In fact Sweden has just about the highest tax take on the planet.

  • Daniel Maris

    For every means tested benefit withdrawn there is a rise in self-respect. I would have thought a Conservative would have understood that. Whatever happened to the party of Samuel Smiles, one wonders.

    Personally I am not a great fan of the 10p tax rate. I prefer a flat rate 20p (no allowances) and a universal benefit that would raise low income families out of poverty without disincentivising them from working.

    • David Lindsay

      No tax on income below national average earnings, no allowances thereafter, and a unified system of taxation, benefits, pensions, minimum wage legislation and student funding, to ensure that no one’s tax-free income ever fell below half
      national median earnings.

      A single form of Social Security payment, called simply Social Security, and guaranteeing that minimum income universally, although that would mostly be done through the giving every company the corporation tax allowance necessary for it to pay this living wage to all of its employees..

      A statutory ban on anything paying any of its employees more than 10 times what it paid any of its other employees, with the whole public sector functioning as a single entity for this purpose, and with its median wage fixed at the median wage in the private sector, to which jobs would no longer be outsourced.

      MPs and Ministers included in that, with a statutory ban on anything, anywhere in the economy, paying anyone more than the Prime Minister.

      • Daniel Maris

        Well no doubt we all have our personal take on these matters, but I think we can agree that the system as it stands is (a) over-complicated (b) creates unnecessary anxiety in benefits claimants and (c) disincentivises work (an extremely serious defect that effectively adds billions to the social security bill).

        Radical reform is required.

      • Tom Tom

        Stand on your policy – get elected – gain a majority and vote it through. If you cannot do that you need to find another route to power

    • Tom Tom

      Sam Smiles was not a Tory – he was a Victorian Liberal. You do not edit Radical newspapers in Leeds as a Tory

      • Daniel Maris

        Yes, but a sizeable part of that party went on to join the Conservatives as Unionists, if you remember.

        • Tom Tom

          Yes but it was not until Lloyd George that the Liberals sought to copy Bismarck and sideline Socialism

      • Bill Kenny

        I hope you are not suggesting that 19th century Liberals of the stripe of Samuel Smiles would sit easily amongst modern day ‘Liberals’?

        • Tom Tom

          Never did I confuse a Radical in Victorian England with a Socialist in 21st century England. If you knew English History you would know LIBERALS were the Party of Manufacturers and Tories the Party of Landowners and Beerage