Tax and Fiscal Policy

Tax rises at the expense of spending restraint is bad economics


Press Release

A new report outlining an alternative to expanding the rail network

Press Release

The UK tax system is overly complex and tax rates are too high

Spending restraint and not excessive taxation is required to tackle the deficit

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.”

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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.