Douglas Carswell's Blog

Tax cuts must mean more than fiscal stimulus

It is encouraging to see that even Ed “spend-and-squander” Balls has come round to saying that we need tax cuts.

As Milton Friedman put it, “the solution to our problem is not simply to elect the right people” ... but “to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing”.

While even the wrong people are starting to say the right things, I fear they do so for the wrong reason .

Tax cuts must not be seen as simply a form of fiscal stimulus.  If taxes are cut on consumption in the hope that we will consume more, they will do little to tackle many of the underlying economic problems caused by years of easy credit and excessive consumption.

Rather than a VAT cut bung, designed to make us spend money we do not have, we should cut taxes on productive activity;  tax cuts on income, labour and on businesses.

Allowing the producers to keep more of what they produce will do more than inject a few billion into the economy. It will begin to set the wealth creators free.

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