The ‘Conservative’ Party is now admitting what any twit should have figured out long ago: voting Tory will not result in lower taxes. Moreover they are trying to make it seem like a virtue. One sound axiom is that whenever a Tory politician uses the word ‘sensible’, it is time to bend over and think of England because they are using the word as a euphemism for either surrendering power to Brussels or keeping your taxes nice and high, and this is clearly the Tory party at its most ‘sensible’.
It always makes me laugh when people like Cameron and his shadow chancellor George Osborne blather on about how they will provide ‘stability’ as if the economy is something that could not possibly work without constant political interference.
The Tories are quick to tell us how Labour has squandered Britain’s economic advantages (as indeed they have) and yet Cameron’s boys seem to bend over backwards to assure everyone that a Tory government will be nothing more than Blue Rinse Blairism. Yet if ‘stability’ is so important rather than a radical change, surely the most ‘stable’ thing would be to just leave the current Blairites in government.
“As the economy grows, we will share the proceeds of that growth between spending on public services and reducing taxes.”
So taxes as a percentage of GDP will reduce. And the percentage is what counts, not absolute revenues, because it reflects the extent to which the state controls the economy.
I think Perry de Havilland has it about right. As, interestingly, did that old crocodile, Rupert Murdoch, in his interview with the sainted Jeff Randall.
What amazes me is that there are still a few twerps around pretending there is a useful distinction to be made between Bliar and Cameron.
Well… other than that Cameron is somewhere to Bliar’s Left.
>So taxes as a percentage of GDP will reduce.
I bet they don’t.
Perhaps it is time for a new party. And no, I don’t mean the Official Monster Raving Loony Party.
On the other hand, perhaps it is just time for you guys to all move to the US. Except, here we have a moron who runs record deficits, botches foreign wars, declares that the president has absolute power, etc. so we’re no better off.
Too bad there isn’t anywhere to move any more.
But will the extent to which the state controls the economy reduce under a Cameron-Blairist government? The auguries are not good on that count.
David Cameron, interviewed in the Financial Times today, attacks Gordon Brown for piling on the burden of tax and regulation but then recoils from promising to reverse such things. What on earth is the point of this man?
Come on Tomahawk, give us the brilliant insights into the workings of this man’s mind!
Industrial output is already falling (although not as much as in such countries as Belgium) and G.D.P. will follow eventually.
“Growth” is not automatic, regardless of the level of taxation and regulation.
Mr Cameron does not have a clue.
Post-industrial economy and all that. Anyway, it’s cheaper to do your industrial thing in China.
Why? And given that British industrial output has been falling for years, why hasn’t GDP followed it yet?
EG
Resources are simply being transferred from where they are no longer or less needed in the UK(industrial/manufacturing) to where they are more needed, like the buoyant service sector. However the latter is gradually being choked under Brown’s regulatory foot. This is what will threaten the UK’s GDP in the long run if Brown stays in power.
I don’t think Cameron is playing a long game. At first, I thought he might be. But now I think he genuinely thinks the Leftists are the centre ground. He doesn’t seem to understand that the socialists hauled the goalposts way left and then dubbed it “the middle ground”.
William Hague understands. David Davis – who I was hoping would win – understands. I am not convinced of Cameron’s ability to reason. He is a very trite sort of person. Anyone who thinks the NHS is worth saving is not a Conservative.
Whilst I am not a doctrinaire libertarian(if such a thing exists) I am convinced that lower, simpler taxes are essential if this country is to grow.
What I find amazing is that despite the success of this country under Thatcher, there has never been a consistent argument made in this country for these things that is based on the fact that the country as a whole will prosper rather than a selfish argument. The problem with this is that people have now become more selfish about the police or health than they are about money in their pocket but have never heard consistently the arguement that lower, simple taxes are better for the economy as a whole.
Cameron, despite his charm and current popularity is a waste of space. I want an alternative to Blairism that will be pushed for the next five years so that people will understand it by the next election, not someone who hopes that if he is aTory version of Blair, people will rather vote for him that Brown.
So now we all know why Labour will remain in power.
……………and what are we going to do about it? UKIP?
Simply give up?
Those who read a comment of mine some many posts back will remember that (yes, OK) “Die Linke” was recently formed in Germany; out of diehard former SED members, Stasi & all, plus disaffected members of the SPD & Greens and are now a party of the Left to be reckoned with.
In the UK it is the Right that is disaffected but can only waffle about it. For goodness’ sake, get like-minded souls together & actually DO something; remembering that sometimes the bedfellows may not have bathed recently but are maybe the only alternative to sleeping alone.
Stability means “it’s out turn to get our snouts into the trough and we won’t change a damn thing”
I am so disappointed to hear that our cousins across the Atlantic have lost their political conservatives so thoroughly to the media pimps on the socialist left.
Of course, in America, we’re not far behind.
Where have the Thatchers gone? Where are the Reagans?
Where are the heroes?
I knew there was SOMEthing about Mussolini!
If Labour has “squandered Britain’s economic advantages,” how in the hell did you get so prosperous? I’ve been going to England since 1954 and have seen your country take a quantum leap forward in the past two decades–you even had the money to wash the grime off of London buildings, revealing good architecture I’d never noticed before.
Mr. Blair strikes me as an “impossible score,” with share-the-wealth socialism coming out of one side of his mouth, and the unions ride high, while his right arm is protecting business and capitalism from undo taxes (according to your countrymen I deal with), and fostering investment. The latter will trump the former every time.
Anyway, my suggestion to you is it could be worse. Look around and smell the flowers. You should have seen that sad realm in the wake of Mr. Cripps.
Thatcher’s reforms.
Were you here during the Winter of Discontent? The Three Day Week? The country was going down the toilet and fast. Things turned around in the 1980’s and that is the legacy that Blair has been squandering.
Mr.de H: To quote from M. Chevalier, “Ah yes, I remember it well.”……….and had had enough of the blight in Blighty in ’74……Adieu.
Today’s wimps seem to have forgotten that, for all their faults (and there were many) it was Thatcher who provided Blair with the heritage he is slowly destroying…… and Reagan who put Communism & its horrors in the midden where it belongs.
permanent expat – it was Reagan and Maggie together who dumped Soviet communism into the midden.
And now Blair is revivifying it with whistles, bells and “eyecatching inititiatives with which he can be personally associated” and has pissed away Thatcher’s heritage. He is a stupid, nasty, vain little man.
But there is also a lurking evil about him.
When he won the first time, I had my household packed, packed my bags and my cats and buggered off. There is no way I would live in the Britain that I intuited, correctly, Blair would create.
Hi Verity; I was wondering when you’d show up. Include Maggie if you will; she certainly shares the “glory” but the “power” was that of the Cousins. It was Reagan who bankrupted the USSR & ensured that our keyboards aren’t Cyrillic. Maggie & Ronnie were good friends who made many mistakes but had a quality which is, in these apathetic times, demonstrably lacking; to whit, guts.
One sound axiom is that whenever a
Torypolitician uses the word ‘sensible’,……
So what will result in lower taxes? Or at least stop them rising.
Paul Marks,
You sound like a union leader. If it could be shown higher taxation and public spending were ‘good for the economy’ (whatever that means), would you therefore be in favour of them?
Jonathan,
David Cameron, interviewed in the Financial Times today, attacks Gordon Brown for piling on the burden of tax and regulation but then recoils from promising to reverse such things.
One could reduce the tax and regulatory burden without lowering tax rates. Most people would still be better off than otherwise, both financially and in freedom.
Verity,
I don’t think Cameron is playing a long game. At first, I thought he might be.
I think it might be a little too soon to make up your mind about that. Cameron’s been in office just over two months, and the earliest he could hope to be PM is 2009. Even were he to win at that point, it is not as if he could suddenly unveil himself as a libertarian superhero or he would be guaranteeing the Tories being out of office permanently from 2014.
Blair’s long game has involved furious dissembling to the public, and deliberate irritation of the naive left, for over a decade. If Cameron does something similar with as much success then Britain will be a better place to live in another 10 years: 4 more years of regulatory rack and ratchet, 5 of headlong reversal disguised as continuity, and the naive right still complaining at the end about “Tory Blair”.
If we argue explicitly for state shrivelling policies, then we can help them come about. We should never expect any Tory government to enact them other than implicitly, in petto. But that must suffice.
The more i hear from Cameron, the smarter i think he is. If I was his advisor, this would be my analysis;
The Conservative party is unelectable because voters think
i) it is packed with old fashioned Daily Mail readers from Tonbridge Wells and grey old men.
ii) the economy is stable under Labour and volatile under Conservatives (they really do).
iii) the party only cares about lowering tax at the expense of reducing public services
iv) the party is anti-immigration and racist
Hence, strategy recommendations;
i) do everything, absolutely everything to counter these four widely held beliefs.
ii) aggressively go after the LibDem vote
iii) actively support Blair, especially proposals that have public support (education, incapacity benefit reform etc) as he will not be standing in 2009
iv) aim to fracture the Labour party
Everything he has done and said is in line with this strategy.
Maybe Perry Metzger is wrong about there being nowhere to move to-
Conservative Party Wins in Canada Election
Stephen Harper seems to be made of the right sort of stuff (If such a thing exists in a politician). And I think they speak English in Canada don’t they?
I think, as was pointed out above, that the Winter of Discontent proved that higher taxes and increased public spending only works if the government du jour actually knows what it’s doing.
I do hope you don’t mean that in a Mark Oaten sort of way.
As I’ve said a a couple of times over the last 2 months, I think that Cameron is aiming his flurry of policy pronouncements at his identified swing-voters in the May 2006 council elections (and eventually the May 2007 ones too), as he needs concrete proof of credibility beyond the media waffle.
The council elections are at least 10 times nearer than the next General Election. What he says in detail in the second half of this Parliament is a magnitude more important than broad-brush speeches in the first half.
We all know the arguments regarding taxation and growth and what may be preferable in a perfect world. The fact is that by maintaining monetary stability and economic growth (something the Tories failed in) Labour has been given a free pass by a large part of the electorate. That is why they have been able to increase government’s take of national income and pass legislation across the board which has and continues to be highly damaging to this country.
Against this favourable economic background the Conservatives have perhaps understandably decided to change their policy to one of not frightening the horses. I can just about understand this Tory strategy so far as the economy is concerned (and even there I think most of us believe the wheels may fall off one by one), but I see no need to ape New Labour in other areas of policy particularly since New Labour strikes me as being singularly unsuccessful across the broader canvass.
I’m not a huge fan of Cameron, but he (and Osborne) have a point.
This government is running up such huge deficits that it is almost certainly the case that the next Tory government will not be able to cut taxes in the short-to-medium term. It will have its hands full turning the public finances around. Margaret Thatcher did pretty much the same during her first term – she controlled spending, waited for the finances to turn around and then got to work on tax cuts.
So why bang on about “tax cuts” and subject yourself to the usual NuLabour smears, when you won’t be able to cut taxes much, if at all, at first anyway? The funny thing is that if you talk about “tax cuts”, NuLabour attacks you to ask which spending you will cut and cites the NHS, for example (knowing the sentiments of voters). If you don’t offer tax cuts and say that you’ll turn around the public finances (which means controlling spending on the likes of the NHS) you deprive your opponents of ammunition whilst sounding responsible.
The tax cuts wil have, unfortunately, to come later.
There can’t be tax cuts under any government as the overheads are – and will probably remain – large. However they may not rise under the Tories significantly and probably they won’t seek too many new and inventive ways of taxing people.
In my ideal, a Tory government would seek to regroup taxation. I’d favour a flat rate all-pay 20% rate that everyone pays (so the ones who can afford to “invest” overseas to avoid tax have to now pay up in this country) and a 20% VAT. More money in people’s pockets which they can save or spend – if they spend, the higher VAT means the nation benefits.
Anyone who has tried to do self-assessment tax will know it’s a minefield. So make it all easier, more straightforward and everyone knows where they are and can thus pay up. Sure, accountants will suffer but it’s a small price to pay for a sensibly structured tax system.
“One could reduce the tax and regulatory burden without reducing tax rates”, writes Guy Herbert. Hmm, that may be true, and is true, but Cameron is missing the point that Ronald Reagan instinctively grasped, which is that tax rates exert a critical influence on incentives and behaviour. That is the point. The marginal impact of tax rates on savings, entrepreneurship is what counts. At present, particularly at the bottom end of the income scale, marginal rates, if you combine the impact of benefits and taxes, are very high. No wonder unemployment is rising, and folk are claiming incapacity benefits and the like.
Cameron has to be prepared to at least think some radical thoughts in this area. If he is simply going to mimic Labour and try to shut down big areas of public debate then, as I and Perry have said, there is no point to Cameron.
I am wondering if Cameron has a clue about economics? His aim should be getting the economy going and a very good way of kick-starting is with tax cuts. Wonder if the Conservative election in Canada will give a clue to Cameron & Co?
Steve
I agree in an ideal world a 20% flat rate income tax would be great. I am not sure if it would work in reality. In any event I think the lowest paid should not have to pay income tax at all. I also think 20% indirect tax is far too high; indeed 17.5% is too high (but we have I think John Major to thank for that). High rates of indirect tax encourage evasion and are in effect regressive as they fall most heavily on the lower paid (a bit like our current income tax).
If “Dave” really wanted to show some spirit, he’d push for a flat tax and argue for the poorest to be taken out of the income tax/NI net entirely. Now that would burnish his “caring” credentials and be a genuinely good idea. It would sweep away much of the horrors of the complex tax credit system as well, as well as put a lot of tax lawyers out of work. Oh wait a minute, such lawyers probably are all Tories…….
I think high taxes are immoral because I disapprove of what the government would do with my money, and I think other people are also entitled to their own spending choices. I have specific preferences between various forms forms of taxation. I have very strong objections to heavy compliance burdens because they amount to slavery as well as theft.
But I don’t think that it is any business of government either to encourage saving, or entrepreneurship, or to ‘get the economy going’. Government should get out of people’s way as far as possible. That doing so may make many people better off materially is a benign side-effect, but is not the reason we seek liberty.
If you think getting rich is the point, then you have no particular reason not to join the Blairite / Singaporean / PRC / MITI / Rhenish-capitalist model of corporate direction and collective wealth.
I assume Johnathan’s comment (“as well as put a lot of tax lawyers out of work”) is for comic value. The only tax experts I have worked with are spend all their time avoiding tax liabilities for companies and high net worth indidividuals.
But I don’t think that it is any business of government either to encourage saving, or entrepreneurship, or to ‘get the economy going’
Guy – that sounds mighty similar to anarchy to me.
If not to aid the creation of wealth, then what is the purpose of government? The most effective means to create wealth is to get out of the way, but it is a strategy not an end in itself.
“stability”? “STABILITY!!!!???”
I want GROWTH!
We need to grow and FAST to provide work and wealth for all these people langishing on Incapunemdisapointment Benefit or filling the offices of Gordon’s Army doing pointless paper shuffling.
The way to grow is to cut taxes. How can we grow if as soon as any extra wealth is created it is handed out to the State sector?
Alas, it is at times like this when we have to remember that the overriding aim of a politician is to get into power…somehow.
I am rapidly thinking our David miss-spelled his name. It should be “Caremoron”
Guy, of course I want the state to be reduced on grounds of principle (having been on the libertarian side of the fence for 20 years I hardly need to have that pointed out to me, thanks). I wanted to make the point that if we are going to argue about the merits/demerits of Cameron’s cowardice on the tax issue, it is worthwhile pointing to the importance of marginal rates on economic behaviour. That happens to be a matter of fact.
Cutting marginal rates is both economic good sense and also the right thing to do.
Esbonio: of course most tax lawyers get their money helping the rich avoid taxes. The tax avoidance industry is a pointless waste. All the more reason to cut and simplify the tax code.
Guy Herbert in his penultimate post, Ron and Jonathan Pearce all make good points. Arguing NOW for the lowest earners to be removed from the tax net would reinforce his caring credentials and draw tens of thousands – hundreds of thousands? – into his fold.
Guy Herbert – Singapore is a hive of entrepreneurism. Sometimes you can’t hear yourself think for the sound of people making deals over their mobile phones. They’re always in the air to the PRC, Hong Kong, Oz, Britain making deals, deals, deals. There is absolutely no collectivism about Singapore. The government encourages business – from the biggest to the smallest. It costs around £8 (it may have gone up a little now, but not by much) to set up a legal company and takes around 20 minutes and you’re ready to go out and make your fortune.
The government is squeaky clean. I am sure Prime Minister Lee Hsien Loong regards Tony Blair and his cohorts with polite contempt.
Esbonio says:
I agree in an ideal world a 20% flat rate income tax would be great. I am not sure if it would work in reality.
Well, lots of countries in the former Soviet sphere of influence have done it, and it is working just fine for them.
On the other hand, they haven’t been conditioned to be afraid.
Which would be all fine and dandy if the economy was likely to be growing and you didn’t mind any cuts being small.
However I don’t want a stable economy. I want a dynamic economy. And I want to keep more of what I earn, rather than generating funds to give politicians something to spend!
Verity – I second your points about Singapore. It also has the CPF, a compulsory “defined contributions” pension scheme that the Government uses as a source of low cost finance for infrastructure projects.
If London had a CPF, we would have had Crossrail a decade ago.
Singapore long ago realised, due to its precarious position, that it must operate as “Singapore PTE” (i.e. Ltd). It is about time Britain wised up to our similar predicament.
The biggest failure of Conservatives in the US is twofold; “cutting taxes” at the expense of increasing the “cash flow” basis debt (about $9 trillion right now) AND just as willing as Liberals to make all sorts promises of future benefits, thereby increasing the “accrual” basis debt (to the tune of $36 trillion right now – with one stroke of the pen Bush added $11 trillion in such debt with Medicare part D a few years ago).
Their economic blue print seems to be “(public) debt really doesn’t matter” which is as noisome a Statist position, if not more so, than any “tax and spend” nonsense the Liberals throw out. What is really being lost is the equation that Assets=Liabilities + Equity in that assets are relatively constant and only grow through expending mental and physical labor over material resources. Allowing an explosion of public debt (cash and accrual) only gives individuals a false sense of their own wealth. Government doesn’t change the assets in any way. They merely create the illusion of greater wealth as the individual deems that they have equity AND are going to get a bushel full of benefits besides. It is a fiction, one willingly perpetrated by modern Conservatives.
But you get the government you deserve. Though I get the feeling that the most myopic are going to be the first out with torches and pitchforks when the simple equation manifests itself, either the benefits aren’t forthcoming or their equity is confiscated lock stock and barrel. The most dense will be the most indignant.
Whoah, folks, Singapore isn’t quite the laisser-faire, small government paradise some think.
Public debt is 102 pc of GDP (compared with 2 pc in Hong Kong)– one of the top ten in the world. The public sector share of GDP, around 10pc, is little lower than Malaysia’s, China’s or South Korea’s, about the same as Hong Kong and much bigger than in ex-commie Cambodia or Vietnam. There has been a lot of dirigisme in the PAP’s economic policy, for example in transport infrastructure planning and in ‘guiding’ business investment away from entrepot services into infotech.
Nine out of ten Singaporeans live in units built by a State monopoly with a standard range of size allocations: one of the most regulated housing markets in the world. Voting is compulsory and the same party has ruled since independence in 1959, with the founding father’s son now in charge and opponents harassed by the courts. The social repressiveness of the regime is well known: flogging with a cane for scratching a car, death for low-level drug smugglers. The fertility rate is worryingly low (1.05 kids per woman, lower than Italy) so the government set up a dating agency and is telling the ladies it’s their duty to have more children.
It ain’t no libertarian paradise! I often think mainland China, now it’s turned to capitalism, is modelling itself on the overseas Chinese of Singapore rather than western liberal democracies.
The usual suspects believe that G.D.P. (a rather flawed measure of economic activity – but let us use it anyway) will go on growing in spite of the vast levels of tax, govenment spending and regulation in the United Kingdom.
Economics is not a natural science (it has to be a logical deductive one, as a couple of Oxford professors showed the best part of two centuries ago – Richard Whately and Nassior Senior, I apologize for my terrible spelling) – there are far two many factors that can change independently for predictions to be a sound way of testing anything.
However, in this case (with the inevitable caveat of “all other factors being equal” – i.e. no alien contact, collapse in the oil price, or whatever) I will say that if G.D.P is still growing a year from now you may all call me Egbert.
Why would it not? It goes on growing in other states which have higher tax, more spending and more regulation. It has kept growing in Britain over the past few years despite significant increases in these things.
It’s a real stretch to call economics a science of any type. It’s really more of an art. Logic and deduction don’t have all that much to do with it, at least in the real world. In economic ideology, yes, they count for much, but not anywhere else.
I look forward to the prospect of doing exactly that. To avoid you weaselling out of it, please list all the things that you would expect to be usable as reasons for GDP growing despite increasing taxation, spending and regulation.
EG
Certainly Euan.
I think we can narrow it down to one – a drop in the price of oil.
This is because if anything more dramatic happens (such as alien contact, or the perfection of cold fusion – or whatever) you will forget about the bet (or at least it will not seem very important).
So the bet is as follows: If G.D.P. in Britain is still growing a year from now (and the oil price is the same or higher than it is now – having not gone below present levels in the year between then and now) you may call me Egbert.
Actually you have a chance of success for the reasons Richard Whately and Nassau Senior of Oxford (and before them Turgot and J.B. Say of France – for all of Say’s unfair account of Turgot as an economic thinker) pointed out.
Economics is a science (in the old sense of a “body of knowledge”) but making mathematical predictions is a mug’s game – however for the purposes of the bet I am willing to be a mug.
Your use of this get-out essentially means that what you’re saying is that it is the high price of oil, not taxation and regulation, that will prevent growth.
How do you explain the fact that countries with higher taxes and more regulation than the UK nevertheless still experience GDP growth?
But it’s hardly a science in any broadly accepted current sense, is it?
EG
No Euan, I think some countries will still have G.D.P. rising this time next year – but I do not think that Britain will be one of them.
However, if the oil price drops for a while (not just one day or something stupid like that) then even Britian might still be growing this time next year.
Remember that some of the countries that have higher level of government spending than Britain, such as Sweden, used to have a much lower percentage of government spending (in the case of Sweden it only overtook Britian in statism in the 1970’s – and of course avoided the costs of both World Wars). Also (oddly enough) Sweden is actually less regulated that Britain in some ways.
I remember sitting through an interesting talk on Sweden (the relative complexity of tax and regulation and well as the level) last year. Not that I am saying that Sweden is wonderful of course.
The level of inflation over time is also important. And Britain (since World War II) has tended to be a higher inflation country than say Germany.
It is not just the inflation rate now that matters – but what damage was done in the past.
Still is the bet on or off?
On the point about science:
I agree that economics is not a natural science (that is what you mean by broadly accepted current sense) – I have been saying that economics should not ape the methods of the natural sciences for the best part of thirty years – at some cost to myself.