Death and Taxes

The Treasury are forecasting, according to the Daily Telegraph, that the tax burden "will rise for 50 years" - in other words, until long after most of us are dead. Our tax-take will rise from 38.4% at the moment to 41.6% of GDP, and public spending will rise similarly from 40.9% at the moment to 43.8% of GDP.

The insight this gives into the minds of Treasury analysts is priceless. Is it more worrying that they think it is possible to forecast that far in advance, or that they think it is necessary to plan for that distance? What about their apparently unthinking and uncaring assumption that not only will the government's slice of the national pie continue to get bigger, but we will be maintaining a significant budget deficit for the whole period? Do they really think that people will still be buying government debt at prices worth selling it, if the state has been overspending for decades? And that the level of taxes needed will rise only in proportion to the level of public spending once the legacy of debts incurred 50 years previously starts to be felt? And do they think that a yet more bloated public sector will be a likely partner of such economic circumstances?

Just as ongoing socialisation and nationalisation seemed inevitable during the 1950s, '60s and '70s, so the continued expansion of the regulatory state seems to many inevitable now. Yet what was actually inevitable was that those trends would be halted and reversed because the economic models on which they were based were wrong. The same goes for the expansion of the state now. The question is: are we, metaphorically, in the 1950s and need three decades of declining economic competitiveness before we realise the error of our ways, and a major upheaval to undo the harm of those decades? Or are we in the late 1970s, realising that the process has gone far enough already, and ready to reverse it? Looking at the state of the political debate and the alternatives offered by the major political parties, I am afraid we are nearer 1950 than 1980.