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January 18, 2005

Tax cuts to renew personal responsibility

Debate about the small proposed Tory tax cuts has focused on the risk that services will have to be cut. But that is not the real issue. Health and education are largely public sector monopolies. Both main parties say they are in favour of ‘choice’, which implies competition (normally seen as the opposite of monopoly), but neither has connected the ‘tax and spend’ debate with the ‘choice’ debate.

The Opposition ought to use tax reform to bring an end to public sector monopoly in health and education. Their voucher scheme for education is a small step in the right direction, but their plans for the NHS are feeble. Most people who go out to work are paying taxes that cover their share of the NHS. But we are forced to pay our share by handing over an unknown amount to the Treasury. Why not give all of us a tax rebate equal to let’s say 80% of the cost of the NHS on condition that we take out a health insurance policy of our choice? We would all continue to pay enough to cover the cost of ensuring access for rich and poor alike, but without being trapped in a monopoly system.

Tax cuts for their own sake don’t inspire anyone. But tax cuts as part of a strategy to restore personal responsibility, end public sector monopoly and create competition that would help to raise standards for all, are a worthy ideal. The Health Policy Consensus Group has proposed how it could be done.

Posted by David Green at January 18, 2005 09:42 AM

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