[Politics] Next Gov: Where will the money come from?

[Nobby Cybergoat]

However, the purpose of tax is not to raise income for government spending. The rich should be taxed because they are too rich - we dont need their money to fund anything.

Had to read that 9 times.

We don't need the money from the rich for government spending? Is that what you're saying?

If so, have you seen the state of public services?

 

[Titanic]

I agree with most of this. However, the purpose of tax is not to raise income for government spending. The rich should be taxed because they are too rich - we dont need their money to fund anything.

eh? and what is 'too rich'?

 

[Pavilionaire]

HMRC is not under-resourced!

They really don't have "plenty of resources". A Freedom of Information (FOI) request filed by accountancy firm RSM has revealed that HMRC's customer service staff numbers decreased from 20,139 in December 2022 to 18,996 in December 2023.

The HMRC Tax Agent Dedicated Line wait time has - in c. 6 years - gone from a few second s > 2 minutes > 15 mins > 40 mins > 1h 10 mins > cut-off (last 2 times I had called them). And I'm ringing up often to chase why my clients haven't been registered for Self-Assessment / VAT, i.e. because they have tax to pay but no references.

HMRC staff are binning off Forms to set up clients because they are not trained on how to deal with those Forms. So you have to call up the Helpline to tell HMRC how to do their job / correct their errors, only you can't do that anymore because they don't have the staff numbers to take the calls.

And don't get me started on their entirely useless online chatbot service.

 

[abc]

I agree with most of this. However, the purpose of tax is not to raise income for government spending. The rich should be taxed because they are too rich - we dont need their money to fund anything.

That is the most economically ignorant statement i have ever read (well, at least since the last Budget statement anyway)

 

[Half Time Pies]

It's ironic that we are talking about where the money is going to come from from to cover basic government services at a time where there is more money sloshing around in the economy than there has ever been! Something like £700 billion was handed out by the government during COVID, the question we should be asking is where in the economy has that money gone? Because that's where we should be focusing taxation. The section of society that saw their wealth soar during and after the pandemic should surely be handing some of it back.

 

[BenGarfield]

That is the most economically ignorant statement i have ever read (well, at least since the last Budget statement anyway)

In what way ignorant? Do you believe tax funds government expenditure? If so, why?

 

[Baldseagull]

In what way ignorant? Do you believe tax funds government expenditure? If so, why?

You saw Liz Truss have a little go at your monetary theory, it didn't go down well. Give it up.

 

[dazzer6666]

In what way ignorant? Do you believe tax funds government expenditure? If so, why?

22/23 Government spending - £1,200 billion
22/23 Tax receipts- £1,029 billion

 

[BenGarfield]

Had to read that 9 times.

We don't need the money from the rich for government spending? Is that what you're saying?

If so, have you seen the state of public services?

Well, actually you dont need the money from anyone, rich or poor. The government can issue new money to pay for the resources it needs to meet public purpose. A currency issueing government is not like a household. If the government wants to improve public services it can do so within the real rsources available in the country. Whether it does so or not is a policy choice. This does not apply at local government level, apart from the money LAs receive from central government of course.

 

[BenGarfield]

22/23 Government spending - £1,200 billion
22/23 Tax receipts- £1,029 billion

So what? I agree with the UCL working paper, "The Self Financing State", (https://www.ucl.ac.uk/bartlett/publ...y/self-financing-state-institutional-analysis), and I quote

"There is no requirement for a provisioning of money balances through taxation and
‘borrowing’ activities to occur before government spending can be undertaken. As such, there are
no circumstances whereby it can be said that the government has ‘insufficient money’ for
expenditure to be able to take place or that the government is at risk of ‘running out of money’.
Indeed, one of the fundamental organising principles of the UK Exchequer is for the accumulation
of cash balances to be minimised. Instead, all spending arises via the creation of new monetary
assets and this process is independent of tax and securities dealing activities. The upshot, which
HM Treasury (2020) acknowledges, is that there is no aspect of the government's banking
arrangements which can prevent government expenditure from being realised once it has been
authorised by Parliament"

I suggest you read the full paper to understand this fully.

 

[clapham_gull]

Or at worse move from a £1m house to a £800,000, or do some kind of equity release thing.

Nice sentiment, ridiculous idea. Build more houses, not make them even more exclusive.

 

[BenGarfield]

You saw Liz Truss have a little go at your monetary theory, it didn't go down well. Give it up.

Its not a theory you "have a go at". Its a theory that explains the functionings of our economy right now. Its politically neutraI and can be used by politicians of any persuation. I doubt if Lynn Truss has any more of clue about MMT than I suspect you do.

 

[sahel]

Well, actually you dont need the money from anyone, rich or poor. The government can issue new money to pay for the resources it needs to meet public purpose. A currency issueing government is not like a household. If the government wants to improve public services it can do so within the real rsources available in the country. Whether it does so or not is a policy choice. This does not apply at local government level, apart from the money LAs receive from central government of course.

At last someone with some economic literacy. Not only can we print money (as we have done very liberally over recent years) but we can borrow a lot more . 75% of government borrowing is owned by UK nationals and UK institutions. So one persons liability is another persons asset! You are quite right these are policy choices. The labour Party doesnt mention them because they are frightened stiff they will be called "irresponsible". There are also lots of tax rises available which would not affect ordinary people

 

[peterward]

Labour will inherit a country with record levels of taxation and collapsed public services combined with ever increasing levels of inequality, a febrile world that is going to demand increasing levels of defence spending, an ageing population and an economy that is still in intensive care. Labour will need a magic money tree but they and we know there isn't one. So where do you suggest they go to get the funds they will need to make a difference?

I will start by suggesting an in depth review of charitable status which enables the paying of zero tax - which of course is 100% correct for many charities, from Cancer research to support for people with disabilities and autism. But should, for example, religious organisations benefit in this way? The Church of England have assets of c.£12 billion ranging from farmland and central London property to massive equity funds. They sell large areas of farmland for housing development annually, earning £ hundreds of millions p.a. They pay no VAT, Income or corporation tax, capital gains tax or tax on dividends. I'm not having a go at religion (I personally have a faith) but I feel that when we, rightly, expect the likes of Amazon or Google to pay their fair share of tax, so should some other wealthy organisations that currently go under the radar. If the C of E (or Church Commissioners to be exact - their investment arm) were subject to a full tax regime then they would contribute c.£1 billion p.a. to the taxpayer.

Where would you like Labour to find more money for the benefit of the country or would you simply seek further cuts to public services and the social care budget?

The church may seem an easy target and you single out the CofE, who beyond Sunday services run many primary schools.

Many churches are also very active in their communities, from running food banks (yes we shouldn't need them), to running homeless shelters and drop ins etc, even visiting elderly people on their own, my widowed grandmother, when she was alive, used to go to this free church lunch club for the elderly in Seaford, once a week and she loved it, all voluntary/charitable stuff, many do a power of good in local communities beyond the spiritual stuff.

And if you do churches you must do mosques and other faiths and that's a recipe for vote losing.

Far better to target carbon industry and tax loophole, tax dodgers from commercial behemoths like amazon

 

[Harry Wilson's tackle]

So what? I agree with the UCL working paper, "The Self Financing State", (https://www.ucl.ac.uk/bartlett/publ...y/self-financing-state-institutional-analysis), and I quote

"There is no requirement for a provisioning of money balances through taxation and
‘borrowing’ activities to occur before government spending can be undertaken. As such, there are
no circumstances whereby it can be said that the government has ‘insufficient money’ for
expenditure to be able to take place or that the government is at risk of ‘running out of money’.
Indeed, one of the fundamental organising principles of the UK Exchequer is for the accumulation
of cash balances to be minimised. Instead, all spending arises via the creation of new monetary
assets and this process is independent of tax and securities dealing activities. The upshot, which
HM Treasury (2020) acknowledges, is that there is no aspect of the government's banking
arrangements which can prevent government expenditure from being realised once it has been
authorised by Parliament"

I suggest you read the full paper to understand this fully.

This is very much an opinion piece. The only examples I can think of where a government tried to 'print money' their way out of trouble were the Weimar republic and the Collor and Franco governments in Brazil. That went well. Arguably, Hitler also went full Viv Nicholson, spend, spend, spending to build roads and infrastructure. However I have been told there were downsides to the Nazi regime.

So it seems very hit and miss to spend one's way out of trouble. And if it were that simple, we'd all be doing it. Unless you think the Tories are too evil and labour too stupid to print money to spend on the NHS, schools and infrastructure.

It isn't quite the same thing of course but I feel a bit like I did when I was at school and we had a visit from some young men with long hair who told us our lives, our happiness, our prospects and our acne would all improve if we gave ourselves to Jesus.

 

[dazzer6666]

So what? I agree with the UCL working paper, "The Self Financing State", (https://www.ucl.ac.uk/bartlett/publ...y/self-financing-state-institutional-analysis), and I quote

"There is no requirement for a provisioning of money balances through taxation and
‘borrowing’ activities to occur before government spending can be undertaken. As such, there are
no circumstances whereby it can be said that the government has ‘insufficient money’ for
expenditure to be able to take place or that the government is at risk of ‘running out of money’.
Indeed, one of the fundamental organising principles of the UK Exchequer is for the accumulation
of cash balances to be minimised. Instead, all spending arises via the creation of new monetary
assets and this process is independent of tax and securities dealing activities. The upshot, which
HM Treasury (2020) acknowledges, is that there is no aspect of the government's banking
arrangements which can prevent government expenditure from being realised once it has been
authorised by Parliament"

I suggest you read the full paper to understand this fully.

Any views on what this would do to inflation, and the effects of that inflation?

 

[BenGarfield]

At last someone with some economic literacy. Not only can we print money (as we have done very liberally over recent years) but we can borrow a lot more . 75% of government borrowing is owned by UK nationals and UK institutions. So one persons liability is another persons asset! You are quite right these are policy choices. The labour Party doesnt mention them because they are frightened stiff they will be called "irresponsible". There are also lots of tax rises available which would not affect ordinary people

Thanks for broadly agreeing, but one point, the government doesnt have to "borrow" at all in the sense that a household does. The issuing of gilts, bonds, whatever you like to call them, also is a policy choice which the treasury and the Bank of England use to control the money supply. They could be abolished altogether.

 

[BenGarfield]

Any views on what this would do to inflation, and the effects of that inflation?

This is what has happened for years,, inflation has risen and fallen due to other factors, not because of the governments ability to create money when it spends and destroy it when it taxes.

 

[dazzer6666]

This is what has happened for years,, inflation has risen and fallen due to other factors, not because of the governments ability to create money when it spends and destroy it when it taxes.

So money supply has no effect on inflation, it's down to 'other factors' ? Righto.

 

[Sid and the Sharknados]

So money supply has no effect on inflation, it's down to 'other factors' ? Righto.

It's almost as though what they're saying is nonsense.