Why dont the authorities reduce our taxes to refloat the economy?
As we hear news of multi billion pound bailouts and more money where that came from, more and more UK tax payers are starting to wonder why the authorities did not just reduce our tax burden to refloat the economy. Surely less taxes means more money in the consumers pocket and more money to spend on the UK economy?
The truth is that this situation we are in is unique and is not down to a lack of spending, more a lack of ready finance available to fund both business and consumers. It all started in the US where sub-prime mortgage lending got out of hand and sent the markets crashing, this then spread to all corners of the world and money markets dried up.
Money markets offer vital forms of short term finance which allow companies to operate on a day by day basis. A company could have assets in the billions but if it needed cash and none was available it could be in big trouble - as we have seen.
Tax payers money is therefore being used to oil the wheels of commerce, keep companies in business and try to bring the economy back to life. In time this will see the economy rise and tax payers benefit from higher incomes and better job security.
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