government spending and taxation in the UK

The always sensible Martin Wolf, on the (im)morality of UK fiscal policy.

By choosing overall balance as its objective, rather than a balance on the budget for current spending, the Conservative party has chosen a demanding objective. This makes it all the more extraordinary that they propose to cut taxes, too. In the current parliament, all the fiscal consolidation has been due to such cuts. The same would happen again in the next parliament under the Conservatives – and then the government would cut spending some more.

The Conservative leadership says such an adjustment is the moral choice. Some do indeed argue that the moral choice is to leave money with the people who earn it. But that would also leave them without a state. In practice, then, morality necessitates a balance between meeting legitimate demands upon the state, on one hand, and the costs of taxation, on the other. This choice is at the very heart of democratic politics. [Emphasis added.]

Martin Wolf, “Improving public finances is both a moral and technical challenge“, Financial Times, 31 October 2014.

Overall balance takes into account expenditure on both capital and current accounts.

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