Rebalancing the economy

Our government places a high burden of taxation on the part of the economy that we most want to encourage: work.

Work creates wealth and provides pride. Yet we choose to apply much higher effective rates of tax to work than we do to consumption, on the argument that taxes on consumption are "regressive" (i.e. low-earners pay a higher proportion of their income towards it than high-earners).

In the name of "progressive" taxation, we discourage work and encourage consumption. People may not have any work, but we make sure that clothes, toys and electronic goods are cheap enough that people can keep replacing perfectly serviceable items with the latest models. That surely encourages the wrong attitude and an unsustainable economy.

We would pay for cuts to taxes on employment (e.g. Income Tax) by cutting spending as much as possible. Given the depth of our debt crisis, it may be necessary to raise taxes even as we cut spending, if the pound is not to collapse and cause a crisis. If so, we would change the balance of funding for whatever is left still to be funded after spending-cuts, so that more is paid from tax on consumption and less from tax on work.

This would (a) make the economy more robust and economically sustainable, and (b) give people the right incentives to value what is important. The resulting greater sense of purpose and self-sufficiency should increase happiness, even if people have to work harder and save longer to get the things they want.