It is very clear that the government cannot carry on borrowing at current rates and the coalition’s proposals for reducing government borrowing are prudent. However, today’s VAT rise is unnecessary.
As has been said before, we did not get into this situation because the government taxes us too little. Ever since Gordon Brown abandoned his self-imposed restraint in 2000, government spending, financed mainly by stealth taxes and increased borrowing, has expanded rapidly to its current level of over 50 percent of national income. As such the whole of the balance of fiscal adjustment should come through spending cuts.
Read the rest of the article on the Spectator Coffee House blog.