The Institute for Fiscal Studies (IFS) says there is a conspiracy of silence in this election – that all the main political parties are not being honest enough about their tax plans in this election.
And they have a point. Obviously (and this is the IFS’s main complaint) none of the main manifestos – since WorkO Liberal Democrats and the Conservative parties – have been clear about how they will fill a looming black hole in the government’s spending plans.
There’s no need to go into all the details, but the bottom line is that all government spending plans include some general assumptions about how much spending (and, for that matter, taxes and economic growth) will grow in the coming years. Economists call this the “baseline.”
But there is a problem with this basis: it assumes a very slow increase in overall public spending over the next four years, an average of about 1% per year, after accounting for inflation. Which doesn’t sound so bad, except we all know from experience that National Health Service spending always grows faster than that, and that 1% needs to accommodate all sorts of other promises, like increased spending on schools, defense and so on.
If all of these parts of the government consume a large portion of that extra money (much more than a 1 percent increase, certainly), then other parts of the government won’t receive as much. In fact, the IFS considers these other parts of government – from the Home Office to the legal system – will face annual cuts of 3.5 percent. In other words, it’s austerity again.
But here’s the brilliant thing (at least for politicians). While they have to establish a baseline to make all the other sums add up, the dysfunctional nature of the way the government sets its spending budgets means it only has to fill in the fine print about which department gets what when. conducts a review of expenses. And this spending review will only be done after the elections.
The result is that all parties can pretend to adhere to the baseline, even when it is obvious that more money will be needed for these unprotected departments (or else it will be a return to austerity).
So yes, the IFS is right: the numbers in every manifesto, including the Labor Party’s, are massively obfuscated by this other, larger conspiracy of silence.
But I would argue that, in fact, the conspiracy of silence runs even deeper. Because we’re not talking enough about just fiscal baselines. Let’s consider five other issues that none of the major parties are tackling (when I say major parties, in this case I’m talking about the Conservative, Labor and Liberal Democrat manifestos – to some extent the Green It is Remodeling are somewhat less guilty of these specific sins, even if they commit others).
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Taxes rising
Firstly, for all their promises not to increase any major tax rates (something that Labour, the Conservatives and the Liberal Democrats have committed to), the reality is that taxes are rising. We will all pay more taxes by the end of the parliament compared to today.
In fact, we will all pay more income tax. But we will pay more because we will pay taxes on a larger part of our income – that is the inexorable logic of freezing the limits at which we start paying certain tax rates (which is what this government did – and none of the other parties says it will revert).
Second, the major parties may say they believe in different things, but they all seem to believe in one eccentric religion in particular: the magic money tree of tax evasion. All three of these manifestos assume that they will generate enormous sums – more, in fact, than from any other single money-raising measure – by tightening tax evasion rules.
While it’s perfectly plausible that you could raise at least some money from cracking down on tax evasion, it’s hardly a slam dunk. The fact that this is the centerpiece of each party’s fundraising efforts speaks volumes. And another thing that is often ignored: raising more money this way will also increase your tax burden.
Should the Bank of England pay large sums of interest to banks? File photo: AP
Thirdly, there is something else that all parties agree on and are desperate not to question: the tax rules. The government has a set of rules that require it to continue borrowing and (more importantly, given where the numbers are right now) total debt up to a certain level.
But here’s the thing. These rules are not given by God. They’re not necessarily that good. Debt Rule is fully playable. It did not stop the Conservatives from raising the national debt to the highest level in decades. And it is not entirely clear what specific measure of debt is used (net debt excluding bank of england interventions) is really the right way.
Which raises another micro-conspiracy. Of all the parties present at this election, the only one debating whether the Bank of England should actually pay large sums in interest to banks as it completes its quantitative easing program is the Reform Party. This policy, initially postulated by a left-wing think tank (the New Economics Foundation), is something that many economists are discussing. It is something that the Labor Party will very plausibly undertake to raise some extra money if elected. But no one wants to discuss it. Chance.
Impact of Brexit
Anyway, the fourth question everyone seems to have agreed not to discuss is: you guessed it, Brexit. While the 2019 election was centered around Brexit, this one, by contrast, featured almost no B-word. Maybe you’re relieved. For many people, we’ve talked about Brexit so much over the last decade that, frankly, we need a break. This is certainly what the main parties seem to have concluded.
But although the impact of leaving the European Union is often exaggerated (no, it is not responsible for all our economic problems) it is far from irrelevant to our economic situation. And where we go with our economic neighbors is not a trivial question in the future.
Anyway, that brings us to the fifth and final thing no one is talking about. The fact that virtually all of the nonsense released during the campaign is completely overshadowed by larger international issues that they seem reluctant or ill-equipped to discuss. Let us take the example of China It is eletric cars.
Brexit almost didn’t appear in the elections. File photo: Victoria Jones/PA
Recently, both US and the European Union announced major tariffs on imports of Chinese EVs. Now, in the case of the US, these tariffs are mostly performative (the country only imports a small amount of Chinese EVs). But in EuropeIn the case of Chinese EVs they are a very substantial part of the market – same for the UK.
Raising the question: what will the UK do? We could make a strong case that Britain should emulate the EU and US in an effort to protect the domestic car market. After all, not imposing tariffs will mean that this country will see a tidal wave of cars coming from China (especially since they can no longer go to the rest of the continent without facing tariffs), which will make it even harder for domestic car manufacturers to compete. . . And they are already struggling to compete.
Likewise, imposing tariffs will mean that the cost of those cheap Chinese-made cars (think: MGs, most Teslas, and all those new BYDs, and so on) will rise. Quite. Is this really the right time to impose these additional costs on consumers?
In short, this is a big problem. However, this has not emerged as a major issue in this campaign. Which is crazy. But then we could say the same thing about, say, the broader scramble for minerals, about net zero policy more broadly and how we will strengthen sanctions against Russia to make them more effective.
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Parish election
Elections are always parochial, but given the scale of these major international issues (and there are many more), this one seems especially parochial.
In short: yes, there were many gaps. Huge gaps. The “conspiracy of silence” goes far beyond the things the IFS has talked about.
But it’s always been like this.
See more information:
Why the US is imposing 100% tariffs on Chinese electric cars
Quick action needed for Britain to compete in the green revolution
Think about the last time a political party actually tackled some long-standing issues that no one wanted to talk about in their manifesto. I’m talking about the 2017 Conservative manifesto, which promised to sort out the mess of social assistance in this country, once and for all.
It sought to tackle a major social issue, intergenerational inequality, thus ensuring that younger people would not have to subsidize the elderly.
The manifesto was an absolute and abject electoral disaster. He was largely responsible for Teresa MayA 20-point drop in the polls led to a hung parliament.
And while most people no longer talk about that manifesto, make no mistake: today’s political strategists won’t soon forget it. Hence the reason why this year’s campaign and this year’s main manifestos are so thin on the ground.
Elections are rarely won based on political proposals. But sometimes they get lost.
This story originally appeared on News.sky.com read the full story
