When any political party does anything that will reduce treasury intake....they're always asked to cost it out.
Increasing productivity has been elusive for ages.(before this cost of living crisis) For example, your productivity ain't going nowhere but south....as you're on here all day
.
The inflation of the last 4 years (?) is locked in....we are not going to have a negative inflation number, so the struggles many face are locked in as well.
Reducing inflation by reducing the tax intake is noble but has no control over the main driver's of inflation. 5% vat off fuel bills will give someone £10 a month...I'd spend that £10 and give the treasury £2 back in Vat. What's the point.
Most people's spending isn't feeding into a thriving economy, it's into a surviving economy.
Anyone knows the answer to much cheaper long term energy....we just need to get on with it.
The media asking politicians to cost things out is one of the biggest lies presented to the public. Something that always bugged me - while I get it appeals to present the public finances as though they're a household budget it simply doesn't work like that. As much as I am no Corbyn fan I did want to shout at the people heckling him saying there was "no magic money tree" - i was like ....there sodding is, its called the Bank of England - they can literally create money!
Anyway I always explain it that taxation, borrowing and monetary issuance are best described as control leavers of the economy - you reduce taxation, borrowing and issue money to make it go faster. You increase taxation, borrowing etc to make it go slower.
You create fiscal policy to generate outcomes. Incentives and disincentives.
A lot of our politicians are clueless about this also and the labour party tend to be particularly clueless.
Non-dom status - this is not about exemption people from tax, its about incentivising investment in the UK.
Increasing NIEC - its a tax on jobs - the government are literally disincentivising employment. Absolutely macaronic.
As such its more about creating "an environment" within which people operate. Its the cumulative impact of policy in the round that gets lost.
You have £10 a month that the treasury no longer has. You spend it in a shop and the treasury gets £2. So what's the point? Well the point is the shop is doing better than before and as there's 100 more people spending £10s they need to take on another assistant. So you've instantly swapped the £1,000 lost from the treasury for potentially someone off benefits paying income tax and NI.
But as per cumulation, it's the reduction in VAT, its the reduction in green levies, its the cumulative impact of reducing energy costs for people, and businesses. Inflation isn't necessarily baked in, market forces can reduce prices as well as raise prices. The government are currently trying to induce those market forces by making people poorer so they stop spending so prices are forced to reduce. They're not being honest with the public but thats what they are doing.
FYI - i don't agree with his solution (wealth taxes) as I don't think they work but Gary Stevenson is a good watch on YouTube from the perspective of explaining broader economic concepts in terms of the fundamental structural challenge of our (and most western) economies of more and more people fighting over fewer and fewer resources.
