Alex Massie

Why don’t we just abolish the income tax?

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Whew! In a bold statement of intent, the Tories said today they "will consider" cutting taxes. Wear them medals with pride, boys. You've earned them. Predictably Labour are calling proposals - mere proposals, not policy mark you -  to trim a mere £14bn from government spending a "lurch to the right" that would leave Britain in some kind of mysterious financial "black hole". Stuff and nonsense, of course, but the people - and much of the media - might just buy it. For more on John Redwood's plans - such as cutting regulation, offering tax relief on donations to universities and, hurrah!, Lifetime Savings Accounts, see the fine fellows at the Adam Smith Institute.

More broadly, in the political context Fraser Nelson rightly says even more ambitious calls for £21bn in spending cuts are just:

a tiny sum when you remember Brown will this year spend £553bn of our money – rising to £682 billion in 2011/12. Any Tory cuts must be put in this context, or the sums just don'€™t mean anything.

And let'€™s not forget that from now until April 2012, Brown intends to raise tax by an average £32 billion a year, according to Treasury figures. Would it be so bad if the Tories put a stop to that? Or slowed it down a little? If even Redwood is talking about cutting just £14bn in regulation costs (not tax) then it'€™s game, set and match to Brown. A high-spending big-government consensus has effectively been reached.

Prompted by an email from an old friend, here's an altogether more radical notion:

ABOLISH INCOME TAX. COMPLETELY. UNIVERSALLY.

There. Said it. The difficulty in doing this, politically at least, is persuading folk that you're not a howl-at-the-moon type. In the current climate of Big-Government-Is-Best that might be tricky. Nonetheless it doesn't seem, according to my back of the envelope calculations, to be completely outlandish. It would merely require the government to reduce spending to the level it was at just six years ago

.

Yup. That's it. Put like that it doesn't seem quite so outrageous, does it? Alternatively the Tories could suggest that if Gordon Brown can't achieve his goals with £400bn a year he should let someone else have a go who thinks they can.

In 2001-02 the UK budget was £392bn; if memory serves the country did not fall apart. Income tax receipts contributed £108bn to that. In 2007-08 HM Revenue expect to collect £152bn in income tax receipts. Uncannily, if you subtract that figure from the overall government spend of £553bn you get us back to the good old days of 2001-02. (Sure there's inflation etc, but you can adjust for that by tinkering with consumption taxes.)

Perhaps this is too neat  - maybe even too simplistic! - to be possible and clearly there'd have to be some tinkering with it all, but the basic point remains valid: it would be possible to eliminate the income tax entirely and not ruin the country. Far from it, in fact, when one thinks of the many obvious moral, political and economic benefits from doing this.

So,Mr Redwood, Mr Osborne and you too Mr Cameron, I scoff at your feeble £14bn. What is this? A kindergarten for scaredy-cats? Think bigger. Like ten times bigger. Go on, dare you...

UPDATE: Christ, here's why something gotta be done. David Farrer hears Alastair Darling, Chancellor of the Exchequer (And David's MP), complain that:

Take £21 billion out of the economy and it's bound to have an effect.

As David says, "Does the Chancellor really think that the economy consists solely of the state sector? What's being proposed is the transfer of money from the less productive part of the economy to the more productive part with a resulting increase in overall welfare."

Quite.

Written byAlex Massie

Alex Massie is Scotland Editor of The Spectator. He also writes a column for The Times and is a regular contributor to the Scottish Daily Mail, The Scotsman and other publications.

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