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Sunday 20 May 2012

TPA – 2020 Tax Commission Speaks (2)

The proposals in the 2020 Tax Commission final report, from the body set up by the so-called Taxpayers’ Alliance (TPA) and Institute of Directors (IoD), if implemented, would have significant effects on the UK economy. The TPA and IoD will no doubt advance their own propaganda in support of their agenda, but the almost certain reality will not be told – not by them, that is.

More bore from the second floor

Lowering the poverty line and abolishing – even partially – the minimum wage will have one immediate effect, and that is a reduction in purchasing power leading to a corresponding fall in economic activity and an increase in unemployment. The idea that the TPA inevitably advances, that if wages are lowered enough the market will be “cleared”, will be shown, as in the 1930s and 1980s, to be fatuous.

And those subjected to that lower poverty line will be less likely to get themselves back into employment, as they will have even less money for the most basic of purchases – like bus and train fares. Access to a car will become more difficult. Equally, access to a decent standard of nutrition will also be less easy. And that smaller state will make the NHS less accessible.

Imposition of a “flat tax” will mean the TPA’s backers paying less – the pay day that they have been waiting for – but the lower tax take will mean tens of thousands more public servants being thrown out of work. Some services we take for granted – libraries, the local tip, street cleaning, road maintenance, care for the disabled and elderly – may cease to be provided.

All of this will also drive a contraction in economic activity, with higher unemployment, less in benefits for the least fortunate, and less spent on education and training. Public transport will, in many rural areas and even towns, be wiped out as subsidies are ended – another TPA way of making savings. Marginal rail services will face withdrawal.

A significantly smaller state will mean no group of workers will be insulated from reductions in their workforce: that includes the Police and other emergency services. Justifying such action, the TPA will point at other countries and stress that “they did it this way”. But no economy with the size and characteristics of the UK will be cited, because there isn’t one.

The joint spirits of Ronald Reagan and Margaret Thatcher will be summoned, and their ability to make folks feel better will be recalled. Their rather greater ability, to inflict mass unemployment while hiking up deficits and debts, will not be told. And all the while the mantra of “fairness” will be incanted at every opportunity. This will be music to the ears of the TPA’s overmonied, greedy and cowardly backers.

For the rest of us, it will be very bad news indeed. And there's more to come.

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