Writing for National Review’s Corner, Andrew Stuttaford claims that a value-added tax is a recipe for good policy because income tax rates were reduced under Thatcher and government spending (as a share of economic output) fell – good steps that were enabled, he asserts, by an increase in the VAT.
Stuttaford’s heart is in the right place, but the knock against a VAT has never been that it is impossible to have temporary periods of good policy. Instead, the problem is that an additional revenue source will enable an increase in the overall burden of government over time. And since the U.K.’s top tax rate is now up to 50 percent (a policy Cameron has no intent of reversing if he happens to win) and government spending has now skyrocketed to more than 50 percent of gross domestic product, all the fears of VAT opponents have been realized. Oh, by the way, it is a near-certainty that the VAT will climb to 20 percent regardless of who wins the election.
The VAT is terrible policy for anybody who cares about preserving liberty and restraining government. Period.
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