It is deeply depressing to see so much economically illiterate comment in the mainstream media. It's even more depressing when it comes from those who should have some basic economic understanding\u00a0but whose knowledge appears to be about as poor as that of the average minister or MP.<\/p>\n
Take Andrew Rawnsley in the Guardian<\/a> yesterday, who said:<\/p>\n O<\/span><\/span>ne of the more sensible things that the Tories did during their otherwise terrible general election campaign last summer was not to make too many promises about tax. Though they never explicitly acknowledged that taxes might have to go up during this parliament,\u00a0Theresa May<\/a>\u00a0and Philip Hammond signalled this could be so when they dropped many of the pledges inherited from David Thingy and George Whatnot. Anyone with a basic diploma in political semaphore could intuit that this meant that there was a strong possibility that taxes would rise.<\/p>\n Possibility has turned into racing certainty. That is one conclusion we can draw from Mrs May\u2019s announcement that there will be\u00a0\u00a320bn extra per year<\/a>for the NHS by 2023. Even the magic money tree can\u2019t produce that kind of cash without some watering by the taxman.<\/p><\/blockquote>\n It's that second\u00a0paragraph that irritates me. Ignore the sexist assumption that there is a 'taxman'. And ignore the trite references to the magic money tree. They indicate ignorance and prejudice in both\u00a0cases, but they're not the issue. It's the tax angle that annoys me.<\/p>\n Of course spending \u00a320 billion more on the NHS has a tax dimension. And of course tax revenues will rise. But that's not because rates will have to increase or allowances will have to be reduced. That is because there will be \u00a320 billion more economic activity\u00a0in the UK economy. And if there is \u00a320 billion more economic activity in the UK economy then the very least that could be acknowledged is that tax will be paid upon it. And given that the average tax take in the UK economy is around 35% of GDP, then that's the minimum additional tax that will be due. So, Rawnsley could at least acknowledge that about \u00a37bn of the 20bn cost of this spend will be settled by the tax due by those it will be spent on.<\/p>\n