Tax Cuts are the Only Cure for the Lockdown Recession
Bill Etheridge - UKIP Economics Spokesman • 12 November 2020
News & Social Media / Post
We must take measures to get the economy back on track before its too late to prevent an economic depression the likes of which hasn’t been seen since the 1930s
The year 2020 has been a catastrophic one. I don’t think that many people could argue anything other than that.
The virus pandemic has spread fear and panic through the population and the government reaction to it has amounted to the greatest clamp down on civil liberties in modern history accompanied by quite probably the deepest recession in the modern era.
The Government has responded to the perceived threat of the virus by instituting a series of lockdowns both local and national. These lockdowns have had many negative consequences but for now let’s focus on the economic disaster. Previously viable businesses in catering, hospitality, tourism, and air travel have been decimated and hundreds of thousands of people have been sat at home on furlough schemes with the taxpayer paying 80% of their wages as their employers have been stopped from trading and generating the money themselves. We were told that furlough was essential to keep employees in place so that when we all emerged from our bunkers after lockdown the economy could have the fabled V shaped recovery and all would be well. This was, of course, total bunkum and it is now broadly accepted that there will be no swift recovery from this self-inflicted disaster. Indeed there is plenty of anecdotal evidence of employees returning from furlough only to be made redundant, evidence of this can be seen from the dramatic rises in unemployment that we are already seeing with the Office for National Statistics (ONS)reporting a rise in unemployment for the third quarter in the UK of 243000.
Projections form the Office of Budget Responsibility suggest that we may see a high of approximately 4 million people unemployed in the coming months with it averaging out at 3.5 million during 2021.
The UK Government has thrown huge sums of money around this year with the national debt breaking £2 Trillion for the first time in our history according to ONS figures and the Guardian reporting on the 8th September that the measures in the Coronavirus Bill were estimated at costing £210 Billion.
It doesn’t take an economic genius to work out that these figures are unsustainable. Indeed, the evidence of this becomes clear when you realise that the Bank of England bought £150 Billion of government debt this year so far according to the Mail on 3rd October. This is, in effect, the magic money tree we have heard so much of in the past being cut down and harvested. The defence of this wild spending spree seems to be ‘don’t worry, interest rates are at an historic low’ and that is true but the clue that they may not remain that way is in the “historic low” part of the sentence!
We must take measures to get the economy back on track before its too late and we go from self-inflicted recession to a longer term economic depression the likes of which hasn’t been seen since the 1930s. There seems to be broad agreement that something must be done but not exactly what that is. It would appear that the Blairite Conservative Chancellor and the Blairite Labour leader are pushing in the same direction to a degree with tax and spend as the cornerstone of recovery and a generous dash of Green magic dust thrown in so we can “build back better”.
The tax and spend approach is one which I reject utterly. There is a different way. Any route out of this self-inflicted disaster will be financially damaging to the exchequer so why not use this as an opportunity to rebalance the economy to a freer market, low regulation, low tax system? It is self-evident that free market systems have always outperformed planned economies and at a time when we have fallen so far behind the economic game why not unleash the free market and help us win the race back to prosperity?
Aside from the obvious fact that we must not have more lockdowns, there are some very straightforward and effective measures we can take almost immediately to boost our growth. The first and most effective method would be to raise the income tax threshold to £14,500 and take everyone on minimum wage out of taxation all together. People on lower incomes are more likely to spend extra cash in their pocket rather than save it and this would lead to an immediate and dramatic boost to demand on the high street. I calculate this measure would cost approximately £15 Billion pounds based on the reported figures of the OBR when looking into such rises published in the Financial Times of 2014. This is a considerable amount of money but in the light of the figures being thrown around at the moment eminently sensible.
There are doubtless many other measures that could be implemented to free up our economy but this first step would have a dramatic effect and could usher in the start of a consumer led recovery that would see us regaining lost ground far quicker than any planned state spending.
If we set our people free with economic and personal liberty restored, we will see 2020 vanish in our rear-view mirror as we head towards a better future. Hopefully this future will never see the same mistakes repeated but with our current crop of politicians we must remain vigilant.
Photo by Robert Bye
on Unsplash
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