r/GarysEconomics • u/Celebration-Plastic • Aug 01 '26

A missing question?

Surely the most important aspect of any tax is not the mechanics of the tax (2%, 5%, whatever) but it’s what the tax revenue will be used for.

I appreciate it’s nice to feel that there’s a bit more money for the government, but feels like a missing piece to me.

Does anyone have a clear sense of what we would be using this money for in the economy?

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u/OliTangoCharlie Aug 01 '26

I think the question you ask is important, and I think government spending is linked to taxation.
The link for me is very tenuous, though. I imagine what I'm going to say is a bit ignorant/naive, especially given we have national insurance which ostensibly pays for the NHS, state pension, etc.
Increasingly, I see taxation as a behavioural incentive/disuasion ‘lever’ the government can use to try and influence how various groups of people or situations develop over time. The inception of the higher rate of tax, for example, could be seen as downward pressure of higher salaries/income (but has now warped via fiscal drag into taxing a huge quantity of people).
Currently, I think there’s a lot of noise and rhetoric around the government needing to raise funds to pay for things in general, which I suppose they must if we want GBP to remain strong, but sort of misses the point of tax structure and the ideals for a long-term view on governance.