Wednesday, 22 April 2009

Fun Online Poll Results & Budget Update

A vast majority of respondents (71%) think that the government should spend less than 30% of GDP, and a further 21% think that 30% is reasonable.

UPDATE: Neil Craig's Fun Online Poll also showed 66% voting for 29% or less, with a weighted average of 28%.

(FWIW, I reckon 20% is 'about right' as that is the maximum that the government can raise from ground rents, licence fees, user charges etc. Any taxes above and beyond that (i.e. on turnover, incomes, payroll or profits) just stifle the economy, and the deadweight losses always far outweight the 'benefit' of the spending/redistribution.)

Anyway, were they listening? I'm afraid not. They've cheerfully admitted that on top of the huge existing tax burden, they'll be borrowing between 8% and 10% of GDP for the next four years!!

What I'll have to look into is how a 3.5% fall in GDP (which inevitably leads to a fall in tax revenues) can possibly lead to a 10% budget deficit (assuming level spending)? Even at a marginal tax rate of 100%, a 3.5% fall in GDP would only lead to a 3.5% deficit. Hmm.
OK, one gimmick I was half-expecting was for the government to pinch one of the Tories' ineffective but cheap* and eye-catching ideas, namely to scrap tax on interest income for basic rate taxpayers. So that's the topic of this week's Fun Online Poll, would you prefer a gimmick like that or would you prefer to be paid a decent interest rate in the first place?

* Interest rates have fallen significantly since this was first announced, so the static fall in revenues would be considerably less than £1 billion, not the £4 billion quoted.


Charlie B. said...

I see from the BBC website that the Budget includes "Child trust funds for disabled children to rise by £100 a year, £200 a year for severely disabled children." Shameful! an incentive to have a disabled child - as a friend said "Quick, drop it on its head!"

JuliaM said...

I wouldn't do that. It might grow up to be Chancellor....

Mark Wadsworth said...

... and then progress to Prime Minister, boom boom.

neil craig said...

Ben Franklin once made a remark about how oppressive a government that took 10% in taxes would be but in his days people expected to pay about a tithe to the church which did all the social services. On that basis something a bit short of 20% seems right & both our polls on this seem to show a remarkable amount of support for that.

I think publicly stating a target figure might be the way for any politician to sell it. Each individual bit of government spending can be sold to the public as no worse than the rest but I'm sure the current +50% can't.

Mark Wadsworth said...

Neil, why don't you link to your poll for the rest of the picture (i.e. the level of support for 'a lot less than thirty per cent')?

neil craig said...

Thanks. The link is

It runs in 10% intervals with 0-9% getting 32% then 20%, then 14%, then 7% then a blip at 40-49% of 11% which is where we have been for decades, then 5%, 2%, 0% 2% & 7% at the end just to prove there are some folks who would never be satisfied with less than everything.

The results are very similar to yours & though our readers aren't randonmly selected do seem so decisive they must be at least semi-representative.

AntiCitizenOne said...

I like the idea of an PVT @ 7% to fund a core state plus a citizens dividend but no transfer (income or sales) taxes.

So the state would take about 10% (Police, Armed Forces, judiciary, admin) and the Dividend would be about 25% of GDP as wages and employment rise.

Mark Wadsworth said...

AC1, as I've said before, I'm not hung up on the whole LVT vs PVT debate, your guesstimate is as good as mine.

AntiCitizenOne said...

Sorry to be repetitive. I Just wanted to paint my idea on your wall (again)!

WV: realiti