The calculation of UKIP’s so-called funding gap of £120 billion (cuts £90 billion plus extra spending of £30 billion), as referred to by Jill Sherman on pages 1 and 9 in today’s ‘The Times’, is seriously flawed.
This ‘gap’ arises only when measured against the numbers in the present state of our stagnant economy, and it ignores the effect of the policy itself. That effect is the whole point of UKIP’s proposed tax reform.
The UKIP policy of applying a low tax-rate above a generous tax-free band (i) is the best possible anti-avoidance and anti-evasion strategy you will find; (ii) encourages industry, productivity and growth; (iii) increases the taxable capacity of the economy as a whole; and (iv) expands the available private sector tax-base in a ‘virtuous upward spiral’ that eliminates acres of anti-avoidance junk in the statute book.
Political analysts haven’t a clue when they say “the UKIP figures don’t stack up”, any more than they were able to predict the outcome of what President Reagan did in the ’80s when he reduced the top rate to 28%. That measure too did not ‘stack up’, but it unleashed a wave of productivity that set the economy back on growth track. Of course you can’t measure the effect in advance – but it always succeeds in achieving high growth rates (Singapore, Hong Kong, Switzerland, Eastern Europe). All that is needed is the courage to apply it.
People instinctively warm to a policy that will leave them with more of their own earnings!