LA News Releases, Labour Call for Tax Cuts to be Welcomed, 16th June 2011

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News Release from: Sean Gabb, Director, the Libertarian Alliance
Contact: Sean Gabb - - 07956 472 199
Date: Thursday the 16th June 2011
Release Time: immediate
Other Details: See below

The Libertarian Alliance Welcomes Labour Call for Taxes to be Cut

Facts: On Wednesday the 16th June 2011, Ed Balls, who is Shadow Chancellor of the Exchequer (that is, the spokesman for the British Labour Party on economic affairs), called on the Government of David Cameron to cut Value Added Tax from 20 per cent back to 17.5 per cent. His reason is that this is needed to make consumers spend more in the shops, and allegedly restore prosperity though some kind of Keynesian multiplier effect.

Main Statement: The Libertarian Alliance is not in the habit of welcoming calls by Labour politicians. In general, we regard all politicians with fear and loathing. The best people to get into Parliament go there for the bribes and sex. The rest simply like the thought of bossing everyone else about. Anyone who seems to fit into neither category has simply not yet been found out. However, Mr Balls is absolutely right to call for a cut in VAT.

This is a bad tax simply because it is a tax - it is theft under colour of law. It is also a bad tax because it can only be collected by an army of inquisitors, and because its costs and complexities of collection give an advantage to big corporations over ordinary businesspeople. A simple cut of 2.5 per cent would not be as positive a step as abolishing it altogether, or, failing that, to cut its rate and raise its threshold, so that fewer ordinary people had to struggle with collecting it. But Mr Balls has called for a step in the right direction.

Sadly, Mr Ball does not call for an equivalent cut in government spending. It remains his settled belief that high government spending is the cause of full employment and general prosperity. Of course, this is a ludicrous belief - as anyone with half a brain or not blinded by prejudice can see at once. Government spending is based on three sources: taxes, borrowing, inflation. None of these can add a penny to the wealth of a nation.

Taxes allow governments to spend money that we would otherwise spend or invest for ourselves. There is no net increase in spending, only a displacement. Indeed, since government spending is generally wasted, even when allegedly "invested," it can only reduce present and future prosperity.

Borrowing takes for present - and wasteful - consumption money that would otherwise be invested. It also raises taxes in the future by creating a legacy of debt that must be serviced.

Inflation is a clever trick that is ultimately played on the poor. The final effect of creating money out of thin air is to reduce the value of all money currently in existence. However, those who first spend the new money are able to buy more of an unchanged quantity of goods and services. Those who spend it last find - at best - that it compensates them for earlier price increases. The sense of prosperity created while inflation is working out its final effects is a mirage - a mirage based on a confusion of costs and prices that brings about economic distortions, and these in turn lead inevitably to recession.

The Libertarian Alliance calls for annual and ever-deeper cuts in tax. These should be made possible by annual and ever-deeper cuts in government spending. We do not call for sick people to be turned away from NHS hospitals, or for the old to be thrown out of their care homes. The British Government spends astronomical amounts of our money on things that we would never buy for ourselves. There is, for example, the £11 billion given every year to the European Union, and the £12 billion foreign aid budget, and the £18 billion spent on fighting a global warming that is not driven by human activity and that may not actually be happening.

£41 billion would let taxes be cut very nicely. The deficit could then be brought under control by stripping out the hundreds of thousands of ruling class sinecures and of jobs for ruling class clients during the 13 years of Labour rule. Let there be an end of so-called health and safety laws, and so-called equality laws, and an abolition of laws against consensual activity - and the deficit will be at least curbed.

In conclusion, Mr Balls is making a little sense. Since politicians usually make no sense at all, this is a move in the right direction. The Libertarian Alliance salutes him!

Note(s) to Editors

Dr Sean Gabb is the Director of the Libertarian Alliance. He is the author of ten novels and ten other books, plus about a million words of journalism. He can be contacted for further comment on 07956 472 199 or by email at

His latest novel, The Break, has been nominated for the 2015 Prometheus Award.

His recent book, Freedom of Speech in England: Its Present State and Likely Prospects, is a defence of freedom of speech without exceptions. 

Or his book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, explains how its current ruling class has turned England into a totalitarian police state, and how this ruling class can be overthrown and utterly destroyed.

Or another of his books, Smoking, Class and the Legitimation of Power, explains how the current "war" on smoking has nothing to do with making individuals healthy, but everything to do with enhancing the power of a totalitarian ruling class, and enriching its relevant client groups.

You can see other books by Sean Gabb here.

Extended Contact Details

The Libertarian Alliance is Britain's most radical free market and civil liberties policy institute. It has published over 800 articles, pamphlets and books in support of freedom and against statism in all its forms. These are freely available at

Our postal address is

The Libertarian Alliance
Suite 35
2 Lansdowne Row
Tel: 07956 472 199