{"id":84197,"date":"2025-07-22T07:36:20","date_gmt":"2025-07-22T06:36:20","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=84197"},"modified":"2025-07-22T09:54:14","modified_gmt":"2025-07-22T08:54:14","slug":"the-government-still-insists-tax-funds-govermment-spending-and-it-it-doesnt","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/07\/22\/the-government-still-insists-tax-funds-govermment-spending-and-it-it-doesnt\/","title":{"rendered":"The government still insists tax funds government spending – and it doesn’t"},"content":{"rendered":"

There was a fundamental flaw in the first line of the Executive Summary of HM Revenue & Customs' Transformation Roadmap<\/a>, published, like many other government documents, just before the summer recess begins, yesterday. It said<\/p>\n

HM Revenue and Customs (HMRC<\/abbr>) has a vital purpose \u2013 collecting the money that funds public services.<\/p><\/blockquote>\n

The trouble is that this claim is entirely untrue. HMRC does not fund any government services. And since the government does not understand what HMRC does, or what the purpose of tax is, it's unsurprising that the rest of the report was lame, technocratic, and almost certainly undeliverable because I very much doubt that most people have the ability to make the tax system work for them online via apps, which is essentially what the plan says will happen.<\/p>\n

In that case, bear with me as I address, for the umpteenth time, this false claim that tax funds the government and why it is wrong.<\/p>\n

The reality is that the UK government (like other currency-issuing governments) creates money every time it spends. Tax does not fund spending; instead, tax is the necessary consequence of government spending and is required to prevent inflation resulting from excessive money supply. Tax comes after government spending, in other words.<\/b><\/p>\n

The steps involved are as follows:<\/p>\n

1. Government creates money when it spends<\/strong><\/p>\n