In an opinion piece in yesterday’s FT, Tim Harford shows what his simple UK budget ideas of “short-term stimulus; long-term fiscal consolidation; and reform aiming at a sane system of taxation,” means in practice.
Hear Hear! But sadly, we remain a million miles away from such sensible ideas. Too much bureaucracy, lobbying, vested interest. For those not able to get through to the FT article, the “undercover economist’s” main points (after ignoring economic forecasts which are usually wrong) are:
- Osbourne’s reducing taxing and spending now is as silly as Gordon Brown’s tax and spending increases.
- Infrastructure spending stimulates demand and paves long-term growth. No private investment needed – govvie rates are rock bottom.
- Scrap national insurance contributions temporarily (like US payroll taxes for social security) for young and low earners.
- Stop favoring elderly at expense of the young: freeze pensions
- Simplify the god-awfully-complex tax system (US is even worse, I’d add), and implement Mirrlees Review (flatter taxes, abolish loopholes; similar to Bowles-Simpson in many ways)
- Set a 4-year budget and stick to it (killing off a lot of lobbyists, hurrah!)