Posted by jj on August 24, 2011 at 11:27:15:
In Reply to: re: bad bank lending at the root posted by NW on August 24, 2011 at 08:47:35:
I am not following your argument
You talk about the narrowing of the tax base, something I have referred many times on this board about. I don't disagree with those sentiments.
False income, or I would phrase it, unsustainable tax receipts, drove both expansion of services and narrowing of the tax base. Again agree.
But if this is your point, it would follow logically that we need to widen the tax base and reduce services, which ultimately is a budget deficit reduction policy. Which was my point in the first place.
The current situation is driven by deficit issues (which one of the causes was the "collapse" in property related taxes) but those taxes were received, I would argue we just didn't spend them wisely (some projects were required and have been worthwhile).
Another way of looking at it is even the credit boom didn't exist the current tax base would be significantly wider than currently and government spending would be a lot lower than it is. However, it would have been easier to maintain this level of service, than to now try and reduce it.
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