Finding a way to raise taxes that is popular is, for some on the centre-left, the Holy Grail. As the well connected Andrew Grice reports in The Independent today, a growing number of people on the Labour side are attracted to the idea of an NHS tax. Their logic is that the public value the NHS so wouldn’t mind paying more for it. They point out that when Gordon Brown raised National Insurance to fund extra spending on the health service there was none of the backlash you would normally expect to a tax rise.
But the reality is that the introduction of a new NHS tax won’t be matched by tax cuts elsewhere. It will simply lead to people paying more tax overall.
Demand on the NHS might well be about to rise. But simply regularly raising taxes to fund extra spending on the NHS will, in the long run, do significant economic damage. It would be more sensible to look at how to reduce demand for the health service rather than just granting it ever larger spending settlements.
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