Global economy a taxing issue

Sir, – I refer to George White’s letter (August 4) concerning the structure of tax credits.

This structure was a Brown/Balls invention in a Labour government to disguise what would otherwise have been rising unemployment figures resulting from a government failure to have a long term plan for economic investment, and continuing to put its fiscal eggs in the single basket of public services.

Common sense dictates that we cannot continue expanding our public services if we cannot generate the income to pay for them.

I agree with Mr White that the tax credit system is a ridiculous scheme, not only for its subsidy impact to business but also for the cost of its administration.

Similar to the foodbank system, which is also a form of subsidy, there is never any shortage of takers seeking to gain benefit from the reduced cost of employment which was the unforeseen consequence of Labour Party manipulation of supply and demand in the UK labour market.

Which, presumably, is why the present government is seeking to phaseout the tax credit system over time and return us to a more natural situation of market economics that does not entail a clever clogs falsification of statistics relating to unemployment trends.

Legislative interference in markets never works. A more appropriate response to low wages would be a collective action for improvement, which implies increased unionisation of the labour market, the problem being the likely wearisome preference

for aggression over conciliation that has been consistently exhibited by union bosses in the past and which, of course, has the effect of closing down firms and, in some cases, entire industries.

There is no easy answer to the problem of living in a global economy where competitor national wage rates are a fraction of those in the UK, but artificial ratesetting by the UK Government is not the answer in the long term. Derek Farmer. Knightsward Farm, Anstruther.