You can’t have tax cuts with a deficit this big… can you?

What do you think? Here are LibertarianLou’s suggestions for recession-friendly, even deficit-friendly, tax cuts:

1. Cut VAT. Cut it back to what it was, then cut it some more. Yes, we need to pay down the deficit. But a tax on spending is not going to help any better than Labour’s ‘tax on jobs’ would help.

2. Keep cutting corporation tax – but only as a job creation incentive. We’re told this is the reason businesses get special treatment – let’s make sure they earn that treatment. Offset the employment costs of hiring new staff, on a sliding scale according to profit margins, with smaller tax cuts for companies who avoid making planned redundancies (assuming there is some way to prove they were, of course, going to make said redundancies). Any business of any size, not just corporations, could apply for these tax incentives. Creating a wealth of new taxpayers and consumers would pay down the deficit much better than the alternative policy of cutting Job Seeker‘s Allowance. Just cutting JSA will do nothing to get most unemployed people past the myriad of complicated barriers they face and into work. Neither, quite frankly, will it make much difference at all to the handful of people who actually are fiddling the system.

3. Iain Duncan-Smith wants people to look harder for jobs out of their home town. Meanwhile, housing benefit is being cut so that the unemployed, and people in low wage jobs, can no longer afford to live in areas where all the jobs actually are. Why not offer any moving claimants, as an alternative to expensive subsidised housing, subsidised travel to work? It would still cost less than subsiding houses in expensive areas. But don’t just hand out taxpayers money – invite employers to cover the cost and give them a tax cut for doing so. What difference does that make? Well, apart from the difference between people spending their own money, and the government spending yours, it would save the government paying people to administer it all, and stop it being regulated by the state.

4. Give small ‘risk incentive’ tax breaks to companies who hire anyone who has been out of work for over two years for the first six months of their new employment. The unemployed find it hardest of all to find work – why are they never mentioned in the discussion about positive discrimination?

4. Scrap council tax – or if that’s not possible, at the very least, don’t un-cap it! Then, while you’re at it, ring-fence – even increase – local government spending on all areas of healthcare, housing, social care, policing, and education (and that’s most of it, or so I’m told). Halve the remaining money given to local government, making the other half only available on application, when needed for specific projects which have local community support.

5. Cut NHS costs by offering a tax break for anyone who wants to use private healthcare. For lower rate taxpayers, the tax break would cover the cost of the private care. For middle rate taxpayers, the tax break would cover part of the care.

6. Means-test free entry to museums and cut all government spending on the arts by half – but give generous tax breaks to artists, actors, celebrities, and anybody else who wants to fund arts projects or exhibitions themselves. Tell Stephen Spielberg he’s entitled to give us the cash for our Film Council if it’s so important to him. I’m sure he could afford to…

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2 thoughts on “You can’t have tax cuts with a deficit this big… can you?

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  1. Cost a deficit pay off to a more manageable figure (not nil – it should never be nil) and move the burden of tax from indirect to direct taxation with simple 10% bands. The high earners always squeal that they will leave the country – they never do. Call their bluff.

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