Wednesday, September 14, 2005

The 50 billion pound project

One of the regular objections to the introduction of a flat tax is that it will leave a gaping hole in the public accounts. The naysayers point mainly to the ASI proposal which suggests a £50bn (or was it £60bn?) shortfall if FT were implemented with a 22% rate and a £12000 threshold. They miss (or ignore) that this is just one possible combination of rate and threshold, and that different sums of money can be raised by varying these according to ones inclinations.

But so what? 22% and £12000 has a nice ring to it, and I'd like to live in a country with that kind of tax regime. So the question is then how to plug a £50bn gap. According to the ASI, the boost to the economy from flat tax is likely to form most of the answer, but I thought it might be interesting to see what reforms could be brought in to save enough money to make up the difference. And hence the idea of the 50 billion pound project.

I'm setting myself a few rules.
  1. All proposed reforms need some reasonable costings with evidence to back up the figures. We are looking for annualised savings of £50bn, so selling the Forth Rail Bridge to the Americans or Ken Livingston to the Arabs is not an option.
  2. All must be politically realistic to the extent that a government with a reasonable majority could be expected to push them through parliament.
  3. If leaving the EU is necessary to bring about the reform then it is adopted as policy regardless of whether it works, or will produce any savings.
  4. As this is a blog, it goes without saying that I'm the final arbiter of absolutely everything.
Suggestions for areas to cut or reform would be welcome. Alternatively, if you think I am getting it wrong and cutting something vital then feel free to tell me too.

The first post will follow in due course.