Nothing very creative about tax (or at least there shouldn’t be) but I read these stats recently and thought it’s the sort of stuff that everyone should know. It simply helps put the cost of running the country into perspective and highlights some of the ridiculous debate and policy fiddling that politicians play around with, without making any discernible difference.
So here we go.

The government collects about £650 billion a year. That’s what it has to spend annually. The big chunks come from income tax at around £160 billion; vat £110 billion; national insurance £110 billion, corporation tax £40 billion and business rates and council tax £50 billion.

Sadly (although £650 billion sounds like alot of money), this isn’t enough to pay for everything the government needs. This all comes to about £730 billion, hence the deficit. And the eyewateringly big items of expenditure are: socialsecurity and pensions at about £200 billion (more than the entire income tax take), the NHS £140 billion, education £100 billion, public order and safety £30 billion. Then there is a very big interest bill on all the borrowings of about £50 billion.

This is all good to know, it makes you realise why the media commentators making a big deal out of a few million quid spent on an unnecessary IT project, or an ad campaign or on tweaking tax by a penny here or there really doesn’t make much difference. Anything less than £5 billion in economic terms is pretty irrelevant.

To really make a dent on the deficit requires either substantial economic growth or major tax increases or radical reform to services like the NHS or social security. No governemt for the last 50 years have managed to increase the overall tax take above 38% of GDP so we shouldn’t bet on that as a solution and I think we all know how successful radical reform to services has been at saving money. So the only real answer to the problem is economice growth, let’s hope it continues.

One thing is for sure, fiddling with the deckchairs, saving a few million here and there is never going to solve the problem.