Troy's briefs no.10

Troy's briefs - over regulated, over taxed and over subdued

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Britain's high tax burden under Chancellor Gordon Brown is costing the UK economy an extra £138bn ($247bn) a year in lost wealth by crushing incentives to work or run small businesses according to a report published on Saturday.

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The research, by Fred Harrison and published by the Institute of Economic Affairs, shows the indirect cost of the tax system to be far greater than usually realised – a vast 12% of national wealth.

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It will deal Gordon Brown a further blow at a time when he is already under fire for his role in Labour’s crushing defeat in the Dunfermline and West Fife by-election last week.

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If added to the 42.4% of GDP already accounted for by the state, according to the OECD’s measure of the tax burden, this takes the total cost of government – even before excluding the massive cost of red tape – to significantly more than half of national income.

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Mr Harrison’s sums are based on the theory of the “deadweight loss” of taxation accepted by all mainstream economists. But Her Majesty's Treasury has refused to produce its own estimate of the size of the problem. Fred Harrison, an econ­omist who also runs the Land Research Trust, demands that: “Remedial action is urgently needed. The Treasury fails to measure the impact of its policies on the economy.”

The principle business 'pressure groups' in the UK are curiously subdued and have not (yet at least) cornered the Chancellor on this issue. Perhaps the Federation of Small Business will ambush HM Government ministers on these very points at its annual confrence in Manchester next month (see link).

Lest we forget that revolutions are born of excessive taxation.

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Left, Queen Boudicca who revolted against Roman taxes in AD 60

Left, The Boston Tea Party, 16 December 1773

Left, Charles I who lost his head as a consequence of overtaxing his subjects, 30 January 1649