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Taxes hinder recovery

    Centre for Policy Studies Acting Director Tim Knox and board member Niall Ferguson were amongst the signatories to a letter to the Daily Telegraph today criticising the 6th June letter signed by 50 academics. It is reprinted below and can be seen here.

     

    Taxes hinder recovery

    SIR – Last Sunday, some 50 academics signed a letter warning that the economy was too fragile to withstand the Government’s planned spending cuts (report, June 6).

    Only a minority of the signatories are practising mainstream economists, which might explain why they criticise the Government’s “break-neck deficit reduction plan” and propose higher taxes, more regulation and another “green deal”.

    In reality, the Government is shaving just 0.7 per cent a year off real expenditure over the next four years and will still be running deficits a full seven years on from the financial crisis. And the academic evidence suggests that cutting deficits will not harm growth in highly indebted developed countries with floating exchange rates – like the United Kingdom.

    Furthermore, existing “green” measures will already raise energy prices by 30 per cent at a time when companies are struggling under the weight of a government sector that absorbs over half of the nation’s income.

    Tax, regulation and expensive, ill-designed “green” measures will not cure our problems. Indeed, the economic evidence suggests that they are strangling our recovery.

    Dr Eamonn Butler
    Director, Adam Smith Institute

    Professor Philip Booth
    Cass Business School

    Professor Niall Ferguson
    Harvard University

    Professor Timothy Congdon
    Lombard Street Research

    Tim Knox
    Centre for Policy Studies

    Mark Littlewood
    Institute for Economic Affairs

    Miles Saltiel
    Fourth Phoenix Research

    Terry Arthur
    University of Buckingham

    Keith Boyfield
    Leriba

    Tim Ambler
    London Business School

    Ruth Lea
    Arbuthnot Banking Group

    Jim Bourlet
    Economic Research Council

    Dr Tim Evans
    Cobden Centre

    Date added: Wednesday 8th June 2011