Gower Institute for Money:
“Yet again we have politicians saying that taxes need to be increased to “pay for” spending; this time it’s for social care.
In the UK, as many other nations, Government spending comes before taxation. The UK Government creates new money every time it spends and deletes it by taxation. We can spend the necessary money NOW, we do not have to tax first to pay for the spending.
As for borrowing, that is not borrowing at all, it is providing investment vehicles called gilts to investors. These defend the desired interest rate, the money saved in gilts does not pay for anything either. The interest paid on these accounts is a matter of choice too.
The Government should spend the money necessary to provide the service. Taxes collected will increase anyway as the people who do the work providing the service will pay tax and NI on their wages and taxes on their spending.
Of course the tax system needs sorting out; avoidance needs to be tackled. But we can do the spending needed now; the tax issue is an important, but separate, fight.”