More people want increased public spending even at the price of higher tax rates, according to the annual British Social Attitudes survey.
But is a pony for all actually possible?
For it\’s entirely possible for taxes to be at such rates that increasing said rate produces less tax revenue than before. That old Laffer Curve thing.
Looking around at the major taxes I\’m not entirely convinced that there is much room to raise them. 45% (including NI etc rather higher than that) seems to be around and about that Laffer peak. Certainly, there are enough people who seem to think it is. The Saetz paper for example, tells us that 54% including employer paid taxes on employment is the peak in a system with allowances. Allowances including things like the basic EU right to bugger off. Ad we are around and about at that 54% with employers\’ NI.
Certainly I think taxes at the benefits/wages interface are above the Laffer Curve. The millions of people facing higher than 60% marginal tax and benefit withdrawal rates, the hundreds of thousands on 80% and more.
We\’re told that 28% CGT is that peak collection rate.
VAT at 20%….not sure I see all that much upside possible in that rate. Fag taxes with the smuggling in from Europe don\’t seem to have much upside. There\’s good economic support (and a lot who shout about the idea to be sure) that any corporation tax rate above 0% is over the long term peak.
I\’m not drawing a line in the sand you understand, insisting that no more revenue can be squeezed from the populace. Rather, pointing out that higher tax rates do not necessarily mean higher revenue. And that it wouldn\’t surprise me at all if the UK economy was around and about at the peak of what can be squeezed out given the current underlying structure.
Change the structure and you probably could gain more of GDP in taxation. But doing so would probably mean going the Nordic route: having a much more classically liberal economy underneath than we do.