Sunday, 2 May 2010

The Taxation Debate: Are Cuts Really Cuts?

Gordon Brown keeps saying whenever the Tories or Lib-Dems talk about tax cuts that they're taking money OUT of the economy, rather than leaving it IN.

He really does believe that the government spends the tax money we hand over so frugally, that we get fantastic value for money. Totally dellusional and I'll give you one example of why.

Everyone knows about the much vaunted car scrappage scheme. Its been a success, making large numbers of people trade in old cars for brand new ones. Thus, saving jobs in the important UK car industry.

Well, you'd think so. EXCEPT: Each one of the 4,000 jobs saved has actually cost £100,000. Thats right, government does so badly when it spends our money even something as simple as the scrappage scheme has huge cost overheads.

A far better idea would have been to give the car manufacturers a tax break in order to keep the staff on the books equivalent to say £30,000 per person, thereby saving £70,000 per job.

Tax cuts keep money in the private economy, where its spent more efficiently, does more and creates more  jobs.

So when Gordon Brown talks about tax cuts taking money out of the economy, you know he's talking through his arse. Wonder if it does that funny slack-jawed thing his mouth does?

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