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The good and bad news about taxes

The good news is that there is a TaxPayers’ Alliance in Britain. TPA is an independent grassroots campaign for lower taxes, smaller government, and greater government efficiency.

The bad news is that TPA and Gabriel Milland of the Daily Express report,

Gordon Brown's spending spree with taxpayers' money has pushed Britain's national debt to more than half a trillion pounds for the first time in history, it was revealed yesterday:

The sum – equal to more than £500 billion – is £170 billion more than when Labour took over in 1997 and could spark further tax rises as the Chancellor battles to fund the burgeoning "black hole" in his accounts.

To fund this huge debt, Brown will raise taxes even higher, but higher taxes have a tendency to drive down tax receipts in several ways. Lowering taxes in countries like Ireland has encouraged work and economic activity; higher taxes in Britain have had the opposite effect. Along with higher taxes comes higher government spending that lures employees from small businesses into the public sector. Higher taxes crowd out the productive private sector activity of smaller businesses by making money more expensive to borrow. It lowers incentives because – a natural human response, really – why risk expanding your business when so much of what you make will disappear into the maw of government.

Major international businesses have a different response to a nation's high taxes. They leave.

Government waste is part of the problem. The good news is that the House of Commons Transport Committee’s report scathingly described some of the reasons for waste in the transport agency,

“The agency has no grip on the costs of its major road projects; is managing a property portfolio it should not possess from expensive offices it should not be using; has only a limited idea what some of its staff are actually doing; and has failed to build a constructive dialogue with local communities over road planning.”

Mike Denham of TPA quoted the report in letter to the Financial Times. As we mentioned, TPA is the good news.

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