No point in hiking taxes any further

SO, THE Hammond Budget is over and what a dog’s breakfast it was. Peering through the gloom it became pretty plain very fast that this was not under any circumstances a Conservative budget. It was a bureaucrats’ document, obediently shuffled into the light by an obedient weakling of a minister.

During national service we had a drill sergeant who, having marched us all in one direction, would change his mind and roar: “As you were, as you were.” This entailed a squad of cadets slithering to a halt, turning round and going the other way. I thought he was long dead but no, he has been reincarnated as the Chancellor of the Exchequer.

Everything to do with enterprise, risk-taking (setting up your own business) and working all the hours God sends was hammered with extra taxes. Everything to do with clock-watching, guaranteed salary, perks, holidays, sick-leave and norisk employment (big company and jobsworth) was left alone.

Two days ago it was back to “as you were”. He didn’t mean that at all. Taxation rules for the selfemployed will remain exactly as they were. But the overall message was depressingly commonplace: more taxes. If you add all the direct taxes, cost-incurring bureaucracy and the approximately 200 indirect taxes – not all apply to everyone but they’re all there – the average Brit is now handing back a huge percentage of his income to the Government. Still the mandarins try to devise new taxes or increasing existing burdens.

THE excuse is simple: we are in debt and getting ever deeper into it. The annual deficit just rises and rises. We are supposed to have had years of austerity. But where is it all going? The answer is easy: into a steadily growing and expensive bureaucratic machine. That alone never, ever, reduces or diminishes.

At each election we are promised it will be reduced, procedures simplified, form-filling curtailed, the burden eased. All bunkum. No politician dare rebuff the jobsworth machine which today has five massive arms.

There is the national bureaucracy, the regional, the local government (biggest of all), the quangocracy (the parallel government appointed to hundreds of thousands of fat sinecures for the luvvies) and the Eurocracy (which we thought we just voted to terminate).

This vast tax machine is supposed to generate the revenue that our public services can live off. But it doesn’t even do that. The Laffer curve cuts it.

Somewhere in the USA Mr Laffer worked out that you can go on raising taxes and this will go on raising government revenue, but only up to a point. Then the two lines on the graph part company. The tax-hike line goes on but the tax revenue line peels away and the actual receipts go down, not up. People stop working, retire early, go on short-time, or just fiddle. More likely they just stop trading. This has already happened to the housing market as the stamp duty goes through the roof.

This was George Osborne’s doing. Trying to make more money, Osborne whacked on stamp duty until the burden cracked the market. So what? At the top end they are rich baskets anyway, so let ’em squeal.

But the point is the entire national tax receipt is suffering. So much for generating revenue to offset the budget deficit and fund the NHS. Taxing at these levels simply becomes counter-productive. If it goes on or is not corrected our high streets will become (are becoming) abandoned alleys as shoppers buy online from mega-warehouses miles away and a million delivery trucks poison our air.

What would turn things around (and the only thing that would) is to cut by a quarter of a million our jobsworth army and reduce by 100,000 forms our paper ocean. But that would mean a level of “bottle” that in combat wins Victoria Crosses – and it simply ain’t there.

So we are left with Hammond at Finance and Fallon at Defence and the VCs stay in the cupboard.