Coun. George Askew rightly points out that Coalition Chancellor George Osborne seeks to address a particular failure of the previous New Labour administration by tackling the issue of tax avoidance by non-doms, thus ensuring the Exchequer receives those tax receipts to which it is entitled. This is encouraging news for the future wealth of the nation (Letters, October 28th).
However, is Mr Askew aware that, according to the economist Cormac Hollingsworth (a former director at financiers Kleinwort Benson), the additional £16 billion cuts imposed by Mr Osborne, as compared with those that would have been implemented by New Labour’s Alistair Darling, have so stifled recent economic growth that, consequently, the structural deficit will only actually be reduced by £3 billion? Or expressed more simply, for every £4 extra cut in spending, the deficit is reduced by a paltry 75p.
This is as a direct consequence of rising social security costs and the loss of tax receipts resulting from increasing unemployment, not to mention the associated effects of reduced consumer spending that further contribute to economic contraction.
Perhaps Mr Osborne should consider the implications of J. M. Keynes’s “Paradox of Thrift” which demonstrates that during periods of economic depression the more you cut, the worse things get.
Grafton Avenue, Reedley