This is a lovely little example of the attitude towards taxation from a certain strand of the left. Some people have been saving some money. Therefore we must tax them for how can we allow people to actually have economic resources in reserve?
The richest 20% of Britons will have reduced their spending by around £23bn by the middle of June, according to analysis by the New Policy Institute that shows the coronavirus pandemic has allowed the better off an unprecedented opportunity to increase savings and pay down debts.
After three months of lockdown, reductions in the amount households spend on entertainment, sport, hair and beauty, eating and drinking and transport, those in the bottom fifth of the income scale will have reduced their spending by just £3.5bn.
D’ye see that? Didja? Inequality of savings – tax them!
That is actually what they say too:
‘Excess saving’ in lockdown: a big new economic challenge
“Excess” is such a lovely word, isn’t it? They’ve got too much. Rather than the truth, people just getting on with maximising their own utility.
The Government could just leave the excess saving to work its way off over time in the hope that high income households will spend as soon as they are able, helping revive the hospitality and night time economy, leisure and tourism, and so on. But doing nothing like that is a bad option. First, it is clear that social distancing is going to delay the revival for quite some while. Second, this saving surge for the better-off is happening at the same time as many are looking at severe drops in their earnings and the UK is facing a severe recession with mass unemployment in the months ahead. That inequality cannot be ignored. Third, if these savings are not spent on productive activity, there is a real danger that they will simply add to asset price inflation, a productively useless but nevertheless profitable activity at least for some.
If doing nothing has adverse macroeconomic and adverse distributional consequences, what are the alternatives? Should the Government try to keep the saving as saving, to finance its debt? Should it tax it away to reduce that debt? Or should it seek to redirect the spending towards productive investment and, if so, how?
See, toldja. People actually having economic resources is a problem that must be solved by government action.
Some people out there really are grotty little shits, aren’t they?