The Sunday Express, March 20, Professor Patrick Minford
This week’s Spring Statement from the Chancellor will be a mass of confusion. He proclaimed in his Budget that he would like to cut taxes, even while he was then busy raising them – a stance by all reports he still holds to. This stance was illogical and self-contradictory.
Tax rates should be stable over time as it is damaging to raise tax early for today’s businesses in order to lower them more for tomorrow’s; that is the reason why a government should borrow. The only proviso is that the Government will be able to afford to pay off the interest and principal later – be “solvent” in other words.
There is no question over. This country’s government solvency. Markets are eager to lend to us at record low interest rates, lower than the rate of inflation. This means that allowing for inflation reducing what we will pay back, markets are actually paying the Government to borrow.
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