The ethical way to balance the books

If the government makes ‘savings’ of £1million, what does it actually save?  Well, by savings we mean job cuts, and almost all of the job cuts are from lowly paid workers.

A person on (say) £12000 a year will pay £673 in tax and NI contribution.  They now do not have a job and so will receive (at least) jobseekers allowance of £73.1 a week, or the equivalent of £3801 a year.  So the immediate saving is not £12000 but £7525 a year.

But someone on a low income will not be saving, but spending their money to live.  The government will therefore lose VAT on their spending, let’s say on average 15%.  Applied to £7525 a year this reduces the saving to £6397.

On top of that, anything that they buy will add to the profits of the business who sell them the product – and the business will be paying tax on the profit. The business will employ someone to get the product to them and serve them – and that person is paying tax too.

So for every £1million that the government claims to cut the saving is probably only half at best.

In terms of human suffering this seems to me to be a very cruel and inefficient way of balancing the books.  Surely it is better to increase the contributions from the wealthy who will not suffer any hardship, but simply see a reduction in the amount of money that they squirrel away?

About Minimalist Christian

Phil Hemsley is a graduate of the University of Cambridge, and a Fellow of the Institution of Mechanical Engineers in the UK. He works for a multinational company in the power industry, has presented technical papers at international conferences and holds many patents. He has published two books, the most recent is "The Big Picture, an Honest Examination of God Science and Purpose". He has lived on both sides of the faith fence. He is married, with two daughters.
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