
William Norton authors this ten point briefing on tax policy.
(1) The share of British output absorbed by the state is increasing. In 2004/5 current tax receipts by the Exchequer were 38.3% of Gross Domestic Product (“GDP”, the market value of goods and services produced by a country). This is forecast to rise to 41.0% by 2008/9, and stay there for the foreseeable future. (Budget 2006, Table C9 page 266). By way of comparison, in 1978/79 tax receipts represented 40.2% and in 1996/97 37.0% of GDP (Budget 2006, Table C25, page 286). It could be said, then, that in fiscal terms the Gordon Brown years at the Treasury have returned the UK to where it was before Margaret Thatcher came to power. Attention is returning to the old battles of the 1970s to see what, if anything, they can contribute to the current debate.
(2) 1970s/1980s Conservatives argued for the reduction of the tax burden on a mixture of grounds:
- moral (people should keep the lion’s share of their own money);
- practical (there is no need for a high tax burden to fund socialism since socialism does not work); and
- commercial (private enterprise is more productive than state control, and lower taxation provides an incentive for private enterprise).
During her time as Leader of the Opposition, and later as Prime Minister, Margaret Thatcher appeared to regard free enterprise and freedom as synonymous (for example, more or less at random: Speech to the Institute of Socio-Economic Studies, 15th September 1975). This was really a debate about “fairness” and equality versus “efficiency” and growth.
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