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Never Enough Taxes

I was wrong in my estimation of jobless figures last week. The Sunday Times has been looking at the problem and apparently, the number of “economically inactive” people of working age has risen 25,000 to 7.94m, the highest since comparable records began in 1971.

“There are many reasons”, it reports, “for the rise in economic inactivity. It is a direct consequence of higher staying-on rates in schools and higher university participation — 1.85m of the inactive are students, no joke intended. It is also a reflection of past policies designed to massage down the jobless numbers for political reasons.”

“It includes early retirees (0.6m), and the long-term sick (2.1m). Many of the inactive (2.3m) — and they would dispute this label — are looking after family and home. In all, three-quarters of the inactive say they are not seeking work.”

“But that leaves just over 2m who say they are. Add that to the 1.5m counted as unemployed and you end up with what John Philpott, chief economist at the Chartered Institute of Personnel and Development, characterises as “underlying joblessness” of 3.5m.

If that isn’t bad enough, the consequences of the government’s extravagance on spending, and the accompanying increase in the tax burden, are coming home to roost. A decade ago, the tax burden in Britain was decisively lower than in Germany. Measured as a share of gross domestic product, it was — at 38% — close to the average of the generally more successful English-speaking “Anglo-Saxon” economies, and within sight of low-tax America.

But this year, says the Paris-based Organisation for Economic Co-operation and Development (OECD), Britain’s tax burden will be 42.4%, higher than Germany’s 42.1% and well above America, which has come down to 32.7%.

Examine the problem in any way you like and you are left with the conclusion that when Tony Blair quits, probably in the next two years. Gordon Brown will be left with a crippled economy and a bed-ridden NHS and Education system, with more than a quarter of the money raised from council tax going to fund "gold-plated" public sector pensions.

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