Will Hutton is indulging in his usual blizzard of assertions to insist that really, we should all just get on with doing what he says and tug that forelock as we do so. As is also usual the assertions don't seem to have much behind them - they're rather wrong in fact.
We most certainly agree that the UK tax system isn't perfect and we make a number of suggestions about how it could or should be better. But we do at least know the basics about the current system. Unlike Willy:
The ideological right’s propositions – that tax in principle is immoral, coercive, anti-enterprise, anti-aspiration and always economically destructive – now set the terms of discussion, policed by our rightwing media. The consequence is that the tax system is now so gravely distorted that it threatens the social fabric.
We're definitely part of that group being sneered at there. But the proposition that tax is a bad thing is clearly and obviously true. It's the price we pay for government and like all prices are it's a cost. Sure, why not aspire to government of Aston Martin levels of luxury? Why not aspire to an Aston in fact? The point being that the price is that cost and we'd all very much prefer to be getting the Aston at the Ford Fiesta price. Because that price is the cost, the bad thing. And that's also why the Fiesta outsold the Aston by some considerable margin.
But crucial in this story is that property is effectively only taxed when it is bought and sold. There has not been a revaluation of residential property prices, on which the ineffective council tax is based, since 1991. As a result, the property market is, because of generous inheritance tax thresholds, tax exemption of capital gains on homes and trivial council tax receipts, the world’s biggest onshore tax haven creating the world’s highest real house prices.
But Britain does not tax property lightly. As the OECD points out, the portion of GDP that is taken in property taxes is both the highest among OECD members and over twice the average at 4% or so. Vastly more tax than anyone else is an odd description of a tax haven.
Britain must create a tax system that raises revenue across a broad base as fairly and with as little economic distortion as possible and it must accept that if it wants health and education to remain public goods financed by general taxation,
Education and health care are not public goods. They are both rivalrous and excludable - as NICE shows every time it refuses to pay for a certain treatment or an Oxbridge college refuses to enroll a student. At least that second Willy should understand given that he runs a college.
It's entirely true that Adam Smith suggested that being part of a generally literate and numerate society was a public good and thus primary schooling might be encouraged usefully by the government. But it's that which is the public good, not the education itself.
then taxation will have at the very least to remain around 35% of GDP and may even have to rise a little.
It is around 35% of GDP. And if we keep the current tax rates then as GDP rises then the percentage of GDP in tax will rise. Because the tax system is leveraged to growth. Because there are tax free allowances on all sorts of things, incomes and so on, then the government's take of a marginal 1% of GDP is very much higher than their average take across all GDP.
As we say, the assertions which Willy brings into play turn out not to be correct. Thus the conclusion he reaches must be suspect too, no?