No doubt the list will grow, and the demand for spending with it. And that is spending we need: this is an economy working at way below optimality and as such additional government spending adds to growth. The glaringly obvious consequence is that it also adds to taxable income. And so it adds to tax yield. In fact, because those who receive extra government spending do at present on average spend 98% of the after tax sum that they receive (which we know because the savings ratio is so low) then in effect it’s only a matter of time before all the extra spending ends up being repaid in tax. A simple arithmetic progression requires that in the end this must be true, and that any debt increases the spending gives rise to are only temporary at best as a result. If in the meantime it has stimulated economic growth then more than the original government spend might be recovered. Again, that’s a fact.
Government spends £750 billion a year. We have outstanding debt of £1.5 trillion.
If all spending comes back in tax, how?
Or is the argument that if we upped spending to £1.5 trillion then the debt would disappear?