The price of low tax
You know things are bad when the head of a major British company calls for delays to tax cuts and more spending. It is also a sign that the cost of austerity is being noticed by firms in the UK and they don’t like what they see.
Jaguar Land Rover, is annoyed because thieves are stealing its cars and exporting them, it is such a threat to its business that it is spending millions trying to catch them, funding police operations which you might have thought should be funded by the tax payer. JLR’s cars are so popular with thieves that insurance rates are soaring, another threat to its business model.
It is the perfect example of why the right wing mantra that tax cuts create growth is such a millstone around the neck of the British economy. For a start all the best economic research points to issues such as infrastructure, investment, education, training, health, the legal system and Trade Unions, yes even Trade Unions, as being what really boosts growth.
But rather than provide those things this government just wants to slash the size of the state and save money for tax cuts.
We know that speedy and fair access to a well run legal system is a must have for economic success; the UK now has one that is collapsing, in fact its courts are literally collapsing.
So are its schools and the number of apprentices is a national scandal. Universities are now struggling with an immigration policy designed for a short term political headline but which throws them to the dogs.
We know that delays in the tax system and in registering new companies are a drag on growth. The firms involved tell us so.
Lousy infrastructure is a huge problem, and the failure to build what the government says it will build is even worse. No one can trust you if you break your promises. The UK has been at the bottom of the G7 league table for infrastructure spending for 4 decades. Would you build a factory in the UK’s regions if the rail system is a joke and the roads log jammed?
Planning policy and house building are a pain in the neck for business and a limiter on growth and productivity.
All these things cost money and they need joined up serious government, with enough experienced staff and consistent policies.
The end result has been the worst of both worlds high tax, low spending and low growth. The UK’s economic model is broken, and the Tory party plans to make it worse by slashing government spending again; it is the only way that it can afford tax cuts and even then no one believes its figures.
But this is the debate it is impossible to have in the UK. The right wing media would slaughter any politician or party that said we need higher spending and more investment for decades to fix the system.
But we do need it, the Tory’s have broken the economy in order to chase tax cuts which they still tell us will boost the economy.
The evidence is in front of their eyes, they have totally failed but they will not see it.
Better schools and training, law and order, better health care, more investment, less poverty, more housing, clear roads, a functioning rail network, better government; it all adds up and it all equals higher growth.
And with higher growth comes more tax revenue- a virtuous circle.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media