Cover of MoneyWeek magazine issue no 567

Hard Times

9 December 2011 / Issue 567

How to survive in austerity Britain

PLUS:

  • Profit from rail's new golden age
  • It's time to buy Japanese property
  • The visionary dreaming of a floating Silicon Valley

Excerpt

Cut tax and shrink the state

This week the National Centre for Social Research released its 28th British Social Attitudes Report. For the BBC it made disturbing reading. The proportion of people who think we should pay more tax to improve health, education and social benefits has fallen. A decade ago, 60% of us were all for it. Today, it is 30%.

The BBC’s conclusion? Britons are “less willing to pay taxes to help others”. But is that really true? The Institute of Economic Affairs (IEA) suggests, I think rightly, that the BBC is looking at things the wrong way around. Ten years ago we all paid rather less tax than we do now, so it might have made sense to us to think that if we paid more, things might get better. Today, after a decade of fast-rising taxes, it doesn’t look quite the same.

Instead, as the IEA says, with state spending already over half of GDP, most taxpayers probably “believe that more government spending is not the answer” to our problems. They’d prefer tax cuts to tax rises. Sadly, this isn’t a view many politicians share. Our leaders – of all parties – continue to treat our crisis as something of a blip. They assume it won’t be long before somehow things return to “normal” and we carry on as before: living on cheap credit and massive state spending.

• Read the full editor’s letter here: Cut tax and shrink the state.