Martin Sandbu’s opening salvo: is there a long-term case for higher taxes?
By Martin Wolf
Does the financial crisis change anything fundamental in the age-old debate about public expenditure and taxation? I would argue that it does not do so.
What the crisis means in the UK is that the public finances are now on an unsustainable path: national income is substantially and, quite probably, permanently lower than people used to think; the amount of revenue taken by the existing tax system out of any given national income is lower than expected; and public spending is permanently higher than people thought, largely because the stock of debt will be bigger.
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