For all practical purpose Mervyn King is a a civil servant. He’s also onbe who has over stepped the mark. Civil servants do not contradict their ministers.
He’s wrong on other counts. He’s so god at economics he did not see the weaknesses in his regulatory system. He did not see the crash coming. He kept interest rates up when they should have been cut. He did not see the importance of supporting jobs when Danny Blanchflower did. So why is he right now?
Why is he right now when his prescription is for more unemployment, no greening of the economy and prolonged slump. Why is he right now when his inaction is designed to preserve the status quo for the City that has failed the UK economy? And why is he right now about fiscal policy when he has never had any real belief in it?
Ignore the man I say. Sack him, better still.
And as for what to do on April 22 – lest we forget it, budget day – the answer is simple. We do need a fiscal stimulus. Not less than £25 billion. But I accept not all should be paid for by debt. Minimum tax rate of 32% on those earning more than £100,000 – removing all allowances to achieve this is a start. Make it 40% minimum tax on all earnings at £200,000. Charge NIC at 11% on all investment income over £5,000 pre annum (pensioners apart). Abolish the domicile rule. Introduce a rule that all UK citizens are UK tax resident and taxable on world wide income unless living permanently in a country with a double tax treaty with the UK – and can prove they pay their tax there. Bring in a General Anti Avoidance Provision. Bring in a Stop Tax Haven Abuse Act. And so on, and on.
Oh yes, we can afford a fiscal stimulus. There is ample money available. We just have to chose who should pay for it. Some of us have the answers. Gordon Brown should be listening.