Rather jumping on a worn topic here, but it’s till puzzling me. So far it would seem that despite all the hue and cry the actual total government spending is still increasing. Which from my own micro economic experience doesn’t tend to be a good way to get out of debt (though I’m told that apparently if your a government you can just borrow indefinitely and it’s all fine). The TPA observe that there’s only two ways for the government to reduce the deficit either spend less or tax us more so we spend less (Government cuts, or cuts for everyone else), so far the strategy seems to be cuts for everyone else (but that’s been increasingly the case for a while now). Now spending as I do a good proportion of my time working to earn money so that I can pay VAT and duty on booze I’m against the government reducing my ability to pay them indirect taxes. Equally being obviously a greedy sort, I’d rather avoid paying taxes if I possibly can so as my total tax burden goes up (especially those taken directly out of my wages) I start wondering if maybe I should get round to finding an accountant – which may or may not be tax neutral for the government but I’ll feel happier as I’ll be able to pay more indirect taxes by buying shiny new toys and more beer (except I now brew my own a lot so less tax there). If I was facing a 50% tax rate I’d be having serious thoughts about if it worth it at all – maybe I could work less and save my money by reducing the overheads involved in working. But even allowing for the governments wonderful plan to tax it’s way into debt more slowly, the application of random taxes on businness that do too well, on people that get too large a bonus (even though they work for private companies) and other such cunning wheezes wouldn’t seem to be the best way to maximise the tax take in the long term. History does after all suggest that most large companies and individuals with any choice in the matter don’t like working in banana republics which apply arbitrary taxes, and we don’t even have any banana’s!
So we’re not actually cutting spending in absolute terms and expereince at the micro economic level leads me to believe that lenders tend to worry more about how much you owe them in total and how well you can pay it back. If you’re still borrowing more each month to make the interest payments sooner or later they stop lending. We’re also not organising things to maximise the tax revenue, nor yet decrease any of the costs incurred by people trying to pursue activities that allow them to pay taxes. Which really leaves me with two questions:
1) When exactly are we going to stop digging a deeper hole?
2) If there are horrendous cuts happening to vital funding of the arts and front line services, but we’re still spending more actual money – where’s the money going? Especially as just a little while back we were meant to be worrying about deflation.
Answers on a postcard please…
Oh and almost forgot if we are ever going to start making real cuts so that you know the government spends less actual money, when do we get a debate on what should be cut and what the government should actually be doing, ‘cos you know that’d be nice.
