When the Conservative-Liberal Democrat coalition announced its “austerity” plan for Britain, they insisted spending cuts would be 75% of the plan, with the rest being tax increases. It was hailed as a “balanced” approach. Two years later, Juan Carlos Hidalgo (CATO) noticed that the spending cuts didn’t materialize:
We all know that the tax increases already took place (the VAT rate went up from 17.5% to 20%, for example). But as we can see, spending cuts haven’t taken place at all. Thus, austerity in Britain consists only of tax increases.
So what did the tax hikes bring to the UK? I’ll let the Telegraph explain:
The Treasury had been expected to pay off £2.2bn of the national debt last month, which is traditionally good for corporation and self-assessment tax receipts. Instead, the Office for National Statistics (ONS) revealed that the Government borrowed £600m more . . . Alan Clarke, UK economist at Scotiabank, said: “If the pace of deterioration continues, then we are on track to miss the government’s borrowing estimate by £30bn.”
I’ve said it before; I’m saying it again. Tax hikes to balance the budget never work.
Cross-posted to Virginia Virtucon