When you're asked why the UK has dire public services one entirely appropriate answer could be that we're simply not willing to pay for them. This is from the OECD, yesterday:
And yes, of course I am aware that tax does not directly fund public services, but in any economy where inflation is to be kept under control there will usually be some correlation between the level of public spending and taxation, albeit with money creation playing its part.
In that case, however it is looked at we cannot hope to enjoy the level of public services that we expect because we simply aren't willing to pay enough to balance the economy around that level of provision.
At some time over the next decade this will have to change, or we will fail to tackle the crises we face. The big problem is working out the narrative that persuades people to accept that this is necessary.
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Could it be because it’s drummed into us that it’s ‘taxpayers money’ that is being spent when it isn’t, its Government money?
Or have I got it wrong, again?
I think you are right
I think it’s dangerous to call it ‘government money’ because it appears to allow the government to do whatever it wants with it and divorces it from common ‘ownership’. I’d prefer it to be called ‘the nations money’ (or something like that) and instil the notion that we elect a government to spend it wisely on our behalf, for the good of the nation’s citizens.
As for ‘changing the narrative’ on public spending, speaking as an ‘older person’ who exchanges views mainly with other ‘older people’ (and bear in mind that we are the cohort in which the largest percentage gets out to vote) the perception, ingrained, it seems, since the Thatcher era, is that money spent on public services disappears into a Big Black Hole and is never seen again. No amount of explaining how it circulates in the economy by directly supporting private enterprise through procurement and indirectly by the wages of public employees spent into the economy, and that a great deal of it returns to the Treasury via taxation, makes any impression.
And that monetising public services means that a whole chunk of the money isn’t spent directly on the service, but is creamed off in profit. It’s met with blank stares…
Likewise pointing out that people in receipt of benefits are taxpayers, too… People can’t see beyond income tax when taxation is mentioned.
Changing the narrative is hellishly difficult. Just look at Richard’s other blog from this morning on public perception of how the money is spent…
All noted
I do listen
I prefer to talk about ‘public funds’ rather than taxpayers money or government money. As in ‘the government is withholding public funds from our public services and channelling them instead to the cronies of government ministers’.
I like that
But, let’s be clear though – what we are talking about is government money
It creates it
It owns it
It spends it
And we make it accountable through the ballot box
Honest question to which I do not know the answer – are public services in the UK better or worse than in New Zealand, South Korea, Australia, Switzerland and Ireland?
What makes the difference? Do these tax numbers include, for example, private healthcare – perhaps mandatory private provision?
Yes Richard – but this has been the case for decades . Under our ‘rentier/monopoly/internationa fraud’ regime and its anti- public spending mass media propaganda deluge, how can we ever expect it to change?
By demanding change – as with all progress
The British Labour Party voted to build 150,000 houses per year. There are some1.5 million unemployed people in UK at the moment. Making the very improbable assumption that these 1.5mm people have all the skills required for house building, could 10 people build 1 house in a year. I doubt it. This suggests that more resources would have to be found to build the 150,000 houses per year.
This presumably implies taxation to free up the required resources but, obviously, not to raise revenues.
Only takes 3-4 months to build a house. Less if you build it in a factory and just assemble on site.
Which is great news.
So we don’t need to use taxation to free up resources to hit the 150k houses per year LP target.
I suspect we would still need taxation to free up resources to deal with the many other policy issues – GND, NHS, Social Care etc.
Estimated cost to build 100m2 3 bed house would be about £180,000 to £200,000. (That includes materials)
Employing 10 people for 1 year at average wage = £310,000,
Therefore I would suggest 10 skilled people could build 2 houses in a year.
Hi Richard,
Firstly, just to say that I think the broad thrust of the article is correct – UK has long favored a lower tax regime than some other OECD countries, with a resulting impact on quality and quantity of tax funded goods and services.
But we need to be careful on cross country comparisons, and especially in 2020. UK GDP for 2020 was calculated differently to most other countries (see https://leftiehistorian.wordpress.com/2020/08/13/has-the-uk-economy-really-been-harder-hit-by-covid-than-other-nations-2-minute-read/ for a quick overview) – though the pattern wouldn’t necessarily be much different in other years (but its exaggerated a little in 2020).
The bigger issue is that different ways of funding health spending and pensions completely mess up comparisons. The USA, with its system of private health insurance, results in lower taxes, as medical insurance premiums don’t get recorded as taxes – similarly if you have a multi-pillar pension system, with a greater emphasis on private pensions, this reduces taxes relative to a system that has a primary state pension (this contributes to Australia’s seeming low tax rate, as payments to what Aussies call “Superannuation” aren’t taxes.
Finally, I’d just note that the quality of goods and services are only partially related to tax revenues, as they relate to government choices too. UK Government spends plenty on infrastructure, but consider what it spends and where it spends it – governemnt could choose to redirect the billions of spending on, say HS2 or Crossrail or the roads budget to other parts of the UK, with a significant impact on overall perceptions of infrastructure
The GDP difference of late reduces our GDP, which makes this worse
Switzerland has what looks like some pretty impressive ‘infrastructure’ and public transport but its tax take is below ours.
Why?
Also of course the UK has a bloated defence budget
They inflate their GDP – that’s what tax havens do
The dynamic has been around politicians using tax rates as a campaign tactic and promising ‘world class public services’ for lower taxes.
And then, once the service is proven to be crap, it gets privatised and gets to be crap all over again.
So there are a number of narratives at work here – the false one about tax, and the other false one about Government having no money (as well as the private sector being better).
We have the tools here to deal with that – and how!
But not the distribution system unfortunately.
Do we want to tax people or money?
Since we are dealing with money and tax is paid in money the obvious answer is we tax money.
There is huge resistance to this especially from the rich asset holders and offshore treasure islanders, who have each bought more than one vote with their untaxed money.
If tax is the mechanism to control the money supply (inflation if you like) then taxing all the money supply is the only way to go.
Life is not that simple
Sorry, but it’s much more complicated than that
I think Phil Stokoe has an important point. It is meaningless to compare tax revenue when different countries fund some public benefits in different ways, e.g. healthcare or pensions. Someone needs to replicate that histogram on a normalised basis, i.e. including health insurance if that is the way adequate health provision is funded, or contributions to a basic pension if that is outside the tax system.
It would be interesting to see how the rank order looks then. And if such a comparison became widely used would it change the behaviour of politicians who currently brag about their “low tax” regimes?
That I know of no one does this
Has anyone ever found such a thing?