Taxes £1,520 per family higher than they would be if British policy had followed the pattern in the rest of the developed world

April 13, 2010 2:39 PM

There are some interesting facts in the Institute for Fiscal Studies briefing that followed the Labour manifesto launch yesterday.  First, bear in mind that we now have the second highest structural deficit - borrowing adjusted for the economic cycle - in the developed world, behind Ireland, according to projections from the IMF.  Here is a graph from our report on the parties' responses to the fiscal crisis:

StructuraldeficitsIMF

The new IFS briefing shows that is despite a massive increases in our taxes relative to the amount taken in other developed countries.  The IFS report:

"The analysis we publish today shows that the widest measure of the total tax burden (total government revenue as a share of national income) has risen since 1997, albeit by much less than the value of Labour's announced tax increases. This reflects the impact on revenues of factors such as the recession and the particular plight of the previously tax-rich financial sector.

In contrast, most industrial countries have reduced their tax burdens since 1997. On an internationally comparable definition, the UK has moved from having the 8th lowest tax burden of 28 OECD countries in 1997 to having the 13th lowest in 2010. If the UK had seen its tax burden fall by the same proportion of national income as the unweighted average of the other 27 countries, then in 2010 it would be 3.3% of national income below that forecast by the OECD for this year - a difference of £49 billion in today's terms or £1,520 per family."

There is no way we have seen the results, in improved public services, to justify that massive increase in the cost of government.  We have fallen down the OECD PISA rankings of educational performance and the TPA's Wasting Lives report showed that there has been no discernible increase in the rate of improvement by the NHS relative to the record on amenable mortality compared to our European peers.

The current fiscal crisis - highlighted by the Debt Clock working its way through Oxfordshire as I write - is built on years of increasing spending and tax hikes.  More taxes will either mean pushing overburdened taxpayers over the edge or hurting our competitiveness and sending jobs and investment overseas.  The answer has to be spending cuts and we've set out how that can be achieved in our new book.

There are some interesting facts in the Institute for Fiscal Studies briefing that followed the Labour manifesto launch yesterday.  First, bear in mind that we now have the second highest structural deficit - borrowing adjusted for the economic cycle - in the developed world, behind Ireland, according to projections from the IMF.  Here is a graph from our report on the parties' responses to the fiscal crisis:

StructuraldeficitsIMF

The new IFS briefing shows that is despite a massive increases in our taxes relative to the amount taken in other developed countries.  The IFS report:

"The analysis we publish today shows that the widest measure of the total tax burden (total government revenue as a share of national income) has risen since 1997, albeit by much less than the value of Labour's announced tax increases. This reflects the impact on revenues of factors such as the recession and the particular plight of the previously tax-rich financial sector.

In contrast, most industrial countries have reduced their tax burdens since 1997. On an internationally comparable definition, the UK has moved from having the 8th lowest tax burden of 28 OECD countries in 1997 to having the 13th lowest in 2010. If the UK had seen its tax burden fall by the same proportion of national income as the unweighted average of the other 27 countries, then in 2010 it would be 3.3% of national income below that forecast by the OECD for this year - a difference of £49 billion in today's terms or £1,520 per family."

There is no way we have seen the results, in improved public services, to justify that massive increase in the cost of government.  We have fallen down the OECD PISA rankings of educational performance and the TPA's Wasting Lives report showed that there has been no discernible increase in the rate of improvement by the NHS relative to the record on amenable mortality compared to our European peers.

The current fiscal crisis - highlighted by the Debt Clock working its way through Oxfordshire as I write - is built on years of increasing spending and tax hikes.  More taxes will either mean pushing overburdened taxpayers over the edge or hurting our competitiveness and sending jobs and investment overseas.  The answer has to be spending cuts and we've set out how that can be achieved in our new book.

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