Tax and Fiscal Policy

Tax cuts should be as high a priority as spending, says IEA


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Mark Littlewood responds to the Spending Review

Responding to the Chancellor’s Spending Review, IEA Director General Mark Littlewood, said:

“The Chancellor has promised the fastest increase in day-to-day spending in 15 years, with every single government department due to get an increase next year. But turning on the taps – totalling £13.8bn of additional spending commitments thus far – does risk undermining the good work done in recent years to almost eradicate the budget deficit.

Promising an additional £6.2bn for the NHS in 2020 will do nothing to fix the long-term, structural problems facing the health service. If spending doesn’t go hand-in-hand with reforms, the NHS will continue to lag behind other EU countries.

Furthermore, Sajid Javid has promised an infrastructure revolution but, as the delayed and wildly over-budget HS2 project shows, state-run infrastructure projects are notoriously inefficient.

By spending the majority of the Government’s fiscal headroom, the Chancellor risks glossing over the fact that the tax burden is at its highest for almost 50 years. If the public finances are in a much improved state, tax cuts should be at least as high a priority as any spending increases.”

Notes to editors:

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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.

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