The unintended consequences of raising taxes.

According to a survey published today, most Britons back more taxation and more spending.  Well, there is a surprise. 

But there we have demonstrated the failure in our education system, bold and stark. These people appear not to have been taught or learned that there are always consequences.

A child earns £1 pocket money.  But the parents say, “Well, hold on, you have earned your money, but we need to pay for your food. And clothes.  And school trips.  And all the other things.  Let’s call it a contribution to costs”. 

So the parents take 30p from the child who wail’s “that means I’ve only got 70p spend now rather than £1”.   

After a while the parents decide that things they have taken on, like the bigger car, the dearer holidays, the SKY subscription, the mobile phone bill, they have all added up and they need more money.  So they say to the child “cost have gone up, I’m afraid your contribution to costs will have to go up too.  That will be 40p.”

The poor child will have to now decide what he will have to give up.  Ten pence less a week is a big hit. 

Actually, that’s exactly what happens in the world of taxation.  Over the years governments of all colours have spent spent spent and spent.  Thinking, "we can always get the money from the taxpayer".  And they can.   

But the consequence will always be the public will have less money to spend.  They will not be able to spend that money in the clothes and food shops, car showrooms, the coffee shops, the bike shops.   

The owners of these shops will say, “Sorry workers, we’re not getting so many people though the door these days, I am closing the business”.  Result?  More unemployed.  More charity shops.  And exactly the wrong outcome.

So why do they keep telling us that it’s a solution when it’s actually contributing to the problem. 

Here is one solution.  One conservative estimate suggests that £120billion of your money that governments takes in taxation is wasted in the UK every year.  That £120billion effectively wipes out the UK’s budget deficit – without closing a single hospital, firing a single teacher.

The waste we are talking about here is not on important things. It’s on things that any normal business would say, “No, we can’t afford that just now.  We will redecorate the office next year instead.”

Common sense clearly leaves you once you are in the position of being able to take other people’s money from them.