Free Tax Cuts!!!

Get yours before they're gone.....

It may be Independence Day in the US, but in the UK it’s Election Day. Yes, UK voters are going to decide today who governs us for up to the next five years. For the benefit of overseas readers (and I know I have some), we in the UK do not elect the Prime Minister. We elect a party, and the leader of that party becomes the Prime Minister. If the party changes its leader, that person becomes Prime Minister whether or not there is a general election. This is how we have managed to have five prime ministers in a few short years. Prime ministers can call a general election whenever they please within their five-year term. Usually, this means they keep a close eye on the opinion polls and call elections when they think the polls are in their favour. Thus, the government can last less than five years, but no government may last longer than five years.

Today we are faced with a number of choices. The governing Conservative party has been lagging behind in the polls for some time, and it is surprising to many that the Prime Minister chose to call an election at this time. He could have gone till January 2025. To others, the timing suggests that he is expecting bad economic news, and is hoping to blame it on the next Prime Minister from the safety of the opposition benches in Parliament. He is also encouraging us to judge him on his own personal record of government, rather than the record of successive Conservative governments which have been in power continuously since 2010. There is little sign that this is going to work. Public services in the UK have been desperately underfunded for years now. Local government authorities have had their budgets slashed to 40% of what they were before 2010. This has resulted in disastrous cutbacks in public services. A timely article in the Guardian newspaper sums these up conveniently.

Surprisingly, perhaps, and in contrast to a couple of his predecessors, the current Prime Minister, Rishi Sunak, has promised more of the same. He proposes to cut taxes (in practice, usually income tax) in order to “let hard-working people keep more of their own money”. This slogan, or variations on it, have been repeated ad nauseam throughout the campaign, amid untrue allegations that his main opponents, the Labour Party, are planning to increase taxes by £2,000 per household. The implication, presumably, is that the Labour Party will take money off people to squander on … well, what exactly? Perhaps they wish to squander it on repairing our schools, many of which are falling down despite being quite new. Or maybe it’s clean water supplies, as the current privatised water companies have been pouring sewage into our rivers and sea for years now, unchecked by the Conservative government. Perhaps they would squander it on mending roads, a sore point with many motorists, as their cars suffer broken suspension and their passengers strained backs. Or it might be health services, which are now chronically underfunded with chronically underpaid staff who are constantly on strike. Or maybe public transport: who needs it anyway, surely anyone with any gumption is running a gas guzzling motorcar? Perhaps some of these taxes could be spent on countering the climate emergency, as the Conservative government has recently cut its targets in this area. One could go on, but the main point is clearly this: there is no such thing as a free tax cut. Every cut in government expenditure means a cut in services to the public.

Keeping more of one’s own hard-earned cash doesn’t sound such a terrible thing on the face of it. But if the government isn’t going to mend roads or give us clean water, who is? If state schools are falling down, who will pay to repair them? The answer, of course, is that people must pay for them themselves. It’s not quite clear how “hard-working individuals” are going to pay for their own clean water, or repair roads, but let that pass. With schools, one answer is for people to pay privately for their children to be educated – after all, fees at our best private schools are only about double the average wage. That shouldn’t be a problem if you’re prepared to take on extra jobs, though it isn’t clear how parents are going to be able to take on several full-time jobs between them. There are, after all, only so many hours in a day. Then there’s health. Since 1948 the UK has had a system of medical care which is free to all citizens at the point of use. It is paid for out of taxation. Almost all the parties agree that the system should continue, but they differ on how the private sector might be involved. Some seem to think the entire system should be outsourced, and others that some selected services could be bought in from private providers. Most of us just want the services, and don’t really care much how they are provided, but it’s not that simple. The private sector is interested in profit, naturally enough, and is therefore principally interested in services that involve minimum resources and maximum profit. They are likely to be much more interested in replacing your knees or your hips than in providing cancer care that might save your life. Some politicians, such as Nigel Farage of the ReformUK party, have proposed private health insurance, as well as a number of other American-style provisions. But before we get too carried away by the glossy images of American TV hospital dramas, it is worth bearing in mind what that means. The United States currently spends over 16% of its GDP on medical services, about half of which are actually government funded anyway. The corresponding figure for the UK’s “inefficient” publicly-financed system is less than 10%. In America, even private health insurance premiums are too expensive for a lot of people to pay. This is one reason for the large measure of government spending on what is ostensibly a privately funded system. Private healthcare is not necessarily more efficient, and surveys of healthcare systems do not suggest that publicly-run systems are any worse. Some of them may be capable of reform, or improvements in efficiency, but that is a totally different matter. The same criticism could be made of many privately-run systems.

One could go on, but surely the point is clear: if the government doles out tax cuts, these must be paid for, or the services will simply disappear. In most cases, disappearance is unacceptable, and would cause inconvenience ranging from broken car axles to premature death. We can either pay for services through taxes, or we can pay for them personally ourselves. Either way, we will pay for them out of our “hard-earned cash”. Either way, if we want the service we will pay for it one way or another. This is why there is no such thing as a free tax cut.