Tax and spend

The NHS is in serious difficulties, and the government believes throwing more money at it will help. Mr Johnson wants his notional £350 million to be picked from the magic money tree, but the more realistic cabinet ministers have another plan. Create a special tax - a beefed up the National Insurance tax - which is specifically to pay for the NHS (called a 'hypothecated' tax).

Sounds sensible, though if the tax is specifically to pay for the NHS does that mean that that is all the NHS gets, or will central tax funds also be given? If the NHS doesn't know how much it will get year to year then that could well be worse than being starved of funds but being able to plan ahead.

Of course, this could be addressed by top ups, so is not a fundamental objection. A much bigger issue is the idea that if the government needs more money then they simply increase taxation.

Obviously this has to stop somewhere - once you are taxing people at 100% there isn't any more money you can squeeze out of them. In fact historically it looks as though 35% is about as far as it is possible to go. Previous governments have changed the mix but the total tax take has stayed very close to 35% over the past 50 years.

The present Tory administration is already above that mark, so an additional tax won't be a magic money tree, it will simply change people's behaviour. Try to squeeze more out of high earners? France and Germany are already trying to entice such people over to them. Take the money out of the pockets of the Just About Managing means paying it back to them as benefits.

What about targeting the middle classes? It is unlikely the Conservatives would impose punitive taxation on the Tory heartlands, but if they did, reducing the net income of their core voters will mean the voters reducing their spending, shrinking the economy and so knocking the overall tax take back to 35% or so.

The government is spending around 45% of our national income, we are only paying for 35% - where is the rest coming from? Right now it is being 'borrowed' from our children and their children as the Tories keep increasing our national debt. There are no obvious windfalls out there - anything that can be privatised has been. Expropriation is often used by other countries in this situation, but that simply makes things worse.

With Brexit coming and all the economic damage that will follow in its wake, the government needs to wake up to its responsibilities and sort out the national finances. Simply shaking more money from our pockets won't work.