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3. If [INSERT COMPANY NAMES] paid their taxes austerity wouldn’t be necessary. This is the idea I find unhelpful: That tax avoidance means we can’t afford things like children’s centres. libraries and swimming pools. It just isn’t true, writes Alex Little in alittleecon.

That’s not to say we shouldn’t get annoyed about tax avoidance… It’s about fairness rather than needing the money to pay for public services. Government needs to collect tax, but if tax is seen as optional for one section of the economy, why should any of us pay what the government says we owe?

So why doesn’t tax avoidance mean less money for public services? Just as we could start with tax providing the money for government spending, we could equally start the circle with the government spending some money into the economy which then comes back to it in the form of tax… As most transactions in the economy are taxed… for every £1 the government spends, it will get back £1 in tax, only not in the same time period. Individuals saving and imports exceeding exports extends the time it takes for that £1 to come back to government, but the delay doesn’t prevent it from funding the programmes it wants to fund.

Read the rest of this fascinating piece on alittleecon.

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