Tax rises at the expense of spending restraint is bad economics
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Commenting on the Liberal Democrat’s economic plans for the next parliament, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“High taxes reduce the incentive to work, save, and invest in the UK. Policies such as an increased bank levy or mansion tax not only smack of the politics of envy, but are economically unsound. The wealthy are already huge contributors, with those earning over £150,000 paying nearly 30% of all income tax. Politicians should be cultivating this tax base, not eroding it.
“What’s more, pledging to ring-fence spending on areas such as health, schools and foreign aid is bad economics. To create the conditions for long-term prosperity, politicians need to review not only the scale of state spending but also the scope of government.
“No government in the last fifty years has seemed capable of raising much more than 35% of national income from taxation, whatever the overall mix of tax policies they have implemented. This means we need to find much greater savings in the state sector unless we are willing to continue to send the bill for today’s spending on to our children and grandchildren.”
To arrange an interview please contact Stephanie Lis, Head of Communications: 0207 799 8900 or 07766 221 268.
Notes to editors:
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“High taxes reduce the incentive to work, save, and invest in the UK. Policies such as an increased bank levy or mansion tax not only smack of the politics of envy, but are economically unsound. The wealthy are already huge contributors, with those earning over £150,000 paying nearly 30% of all income tax. Politicians should be cultivating this tax base, not eroding it.
“What’s more, pledging to ring-fence spending on areas such as health, schools and foreign aid is bad economics. To create the conditions for long-term prosperity, politicians need to review not only the scale of state spending but also the scope of government.
“No government in the last fifty years has seemed capable of raising much more than 35% of national income from taxation, whatever the overall mix of tax policies they have implemented. This means we need to find much greater savings in the state sector unless we are willing to continue to send the bill for today’s spending on to our children and grandchildren.”
To arrange an interview please contact Stephanie Lis, Head of Communications: 0207 799 8900 or 07766 221 268.
Notes to editors:
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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