Now the government is taking more than half our incomes

The government’s stealth taxes have slowly but surely taken more of our incomes. Tax Freedom has crept later, from May into June.

Now the UK government takes financial responsibility for a very large bank with a medium sized government attached, Tax Freedom Day will advance still later, beyond the half way point of the year.

You need to add annual borrowing to the annual tax take. It is now well over 50%. The borrowing takes money away from the rest of us as surely as does taxation, leaving the state free to spend more and more of our national income. Sooner or later, depending on the whims of the markets, extra borrowing will need to become extra taxation, as we seek to repay some of the debt and meet the soaring interest bills.

You cannot run a truly free society nor a successful economy at these levels of state intervention. The government needs to get rid of its overmighty banks, back to the private sector, before they gobble the available cash and jeopardise the governent’s credit worthiness too much.

Iceland and Ireland should be a warning to them. The UK is not in such an extreme position as these two small countries, but the UK state is cruelly over exposed to risk and financial commitments. The £1 billion of bonus payments the government has seemingly accepted at RBS is £ 1billion more of loss for the bank, £1 billion less the government can spend on something more worthwhile in the public sector. There is no magic money or special pot money for the banks. It is all ultimately a caim on the poor taxpayer, who is under the cosh of excess government.

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17 Comments

  1. Brian Tomkinson
    Posted February 21, 2009 at 9:45 am | Permalink

    Don’t forget the “magic money” the BoE is busily printing which will eventually complete our destruction with hyperinflation.

  2. Neil Craig
    Posted February 21, 2009 at 10:45 am | Permalink

    I suspect Ireland will be back into growth long before us. They may have allowed their financial sector to get to big but the underlying economy is sound. This is why they went form 2/3rds to 140% of our GNP. Though, like us they have a housing bubble their prices are falling because they have built them & the supply is so large. Our bubble was always built on a housing shortage & we now have prices falling while we still have a shortage – a far worse situation.

  3. Stuart Fairney
    Posted February 21, 2009 at 11:06 am | Permalink

    This may seem like an odd comment for an atheist like me to make but I am reminded of the first book of samuel, chapter 8, verses 11 to 17.

    He only wanted 10% and that was tyranny!

  4. Simon
    Posted February 21, 2009 at 11:22 am | Permalink

    I don’t think we are a truly free society any more. More spying proposed this morning on those who visit off licences or pubs. The trouble is that we never hear any real objections to all this spying and criminalising people for trivial misdemeanours.

    I also reckon that the state takes a lot more of my income than 50%. I kept an analysis of the price of a tank of petrol from when it was £1.00 per litre. Is it flawed or does the state end up with 90%?

    If you’re a 40% tax payer you need to earn £100 in order to put £60 worth of petrol in your car. Of the £60 another 80% is taken in tax leaving £12. Of the £12 another huge bite of tax is taken in business rates for the garage, attendant’s tax on his pay, delivery lorry tax etc. All this tax will leave the govenrment with over 90% of the £100 you originally earned.

  5. Quentin
    Posted February 21, 2009 at 11:49 am | Permalink

    To say nothing about the legalised troughing that goes on. We all have limited amounts of diposable income but that is rapidly diminishing through increases in Council Tax (ours will rise 5% through equalisation by the new unitary authority) Other utility bills such as Water Rates keep being increased.
    We are in recession and as private companies discount the price of their wares, these others keep increasing theirs as they know the customer has no choice but to pay.

    At least with Labour’s borrowing spree, which will take generations to pay off in higher taxation, the electorate will keep them out of power equally for generations.

  6. cfr
    Posted February 21, 2009 at 12:38 pm | Permalink

    I cannot believe this:
    http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5776568.ece

    Where a bank is effectively bust, bonuses are still up for grabs? Surely the fact that it made a loss should negate this?

  7. Bernard Palmer
    Posted February 21, 2009 at 1:32 pm | Permalink

    Excerpt from ‘What is the Primary Fundamental Right?’.

    “Socialist government’s talk a lot about their prime objective is to protect their people’s lives instead of protecting their people’s freedom. Freedom is best associated with profit, you can’t have one without the other. All governments main objective should be to promote free trade in everything. Only totally free trading gives maximum profit and maximum freedom for everyone. The more taxes or profit given to a government means the less freedom available for its people.

    The US governments now consume around 44% of all American profits which could be translated to mean that the average American has roughly 40% less freedom than the average American in the year 1900, when governments consumed about 4% of all profits. Under Capitalism Democracy and the Primary Fundamental Right that figure could be 1% or less.”

  8. Bill (Scotland)
    Posted February 21, 2009 at 2:02 pm | Permalink

    Whilst I agree with your general point about the atrocious way the government is running the national economy and its finances, surely ‘tax freedom day’ would have to move from June into July before it could be said to be taking in excess of 50 per cent of national income? It’s bad enough what they ARE doing, without momentarily driving me completely over the edge … 😉

    Reply: I’m saying it has if you include the borrowing

  9. oldrightie
    Posted February 21, 2009 at 2:18 pm | Permalink

    That’s not counting my pension they stole!

  10. Johnny Norfolk
    Posted February 21, 2009 at 4:55 pm | Permalink

    Regretably Labour just do not understand any of this.
    Its like talking to a brick wall.

  11. alan jutson
    Posted February 21, 2009 at 5:05 pm | Permalink

    To income tax add National Insurance, VAT, Petrol Duty, Inheritance tax, Capital gains tax, Stamp duty, Corporation tax, The tax on savings, Community Council tax, and a host of other stealth taxes it is probably at least 70 % or more of your total income going to the State, for them to spend as they see fit on your behalf.

  12. Bishop Hill
    Posted February 21, 2009 at 5:08 pm | Permalink

    Interesting that not one of the panellists on Question Time the other night was willing to ask for the pain to be shared by the public sector. Heseltine kept his mouth firmly shut on that score too.

  13. Blank Xavier
    Posted February 21, 2009 at 5:12 pm | Permalink

    All because powers are granted via a democratic process does not mean they will be used democratically.

    Law is passed via democratic process – and there is nothing which stops those laws being unfree, even totalitarian.

    We are in the UK slipping into a legally dictatorial State. We are oppressed not by the cosh of the secret police, but by the legally passed laws of the State.

  14. Economic Voice
    Posted February 21, 2009 at 6:25 pm | Permalink

    I’m going to say it.
    Nothing will change under a Conservative government.
    The overall tax burden on the individual will remain roughly the same whichever of the ‘Big Two’ are in charge.
    There may be minor tinkering at the edges but nothing more. Society as a whole needs massive simplification to achieve significant tax changes.
    This will not happen until the state is rolled back by at least 70%. And this will not happen as one party likes to exercise control and the other is now too frightened to grasp the privatisation nettle.
    Sorry John, but you talking about excess government is a bit rich.

    Reply: I don’t see why. When I was in government I did roll back the state

  15. Bazman
    Posted February 22, 2009 at 12:11 pm | Permalink

    I blame it all on the ‘Red Right’ A form of communism for the rich, with swaths of middle class social security scroungers hanging onto the state whilst expounding the views of some Victorian Neverland about profits, capital and standing on ones own two feet. talking about being poor or just skint as some sort of lifestyle choice. All that needs to be done is cut things. Like the civil service, councils, teaching and so on. What will all the chaps and Gels do in the real world with real world wages? How will cuts create any jobs for them? Have a think about in Jeremy or Jez or even Jezzer as you now might be known. Redder than red is the same as deep blue and the public seem to grasp this as more true as the weeks go on. Will anything change? We will have to see how the next generation of bankers and money men intend to make their fortunes, as they will have to do.

  16. Neil Craig
    Posted February 22, 2009 at 4:29 pm | Permalink

    I can’t say I quite agree with Benjamin Franklin but he does establish a worthwhile baseline & a good example:

    “”It would be thought a hard government
    that should tax its people one tenth part.”

  17. How to Get Six Pack Fast
    Posted April 15, 2009 at 2:36 pm | Permalink

    The style of writing is quite familiar to me. Have you written guest posts for other blogs?

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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