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Savings gap is the result of economic success

Tony Byrne’s recent Independent View column is his usual mixture – highly entertaining with spin and misconceptions (Money Marketing, January 6).

Whether or not you feel that insurance company funds should enjoy negative taxation, as has happened in recent years (speaking as a taxpayer, I do not), this Government has not “taken tax-raising to a new unacceptable high”.

Taxes here are still considerably lower than in almost all European countries and still lower as a proportion of GDP than under the Thatcher Government, admittedly due mainly to the latter’s chronic inability to manage the economy.

The reason that we have a relatively high proportion of “stealth taxes” (that is Tony Byrne’s spin for indirect taxation) is that, more often than not during the last century, we had a Tory Government and indirect taxation has a lesser impact on that party’s relatively wealthy supporters.

The Tories’ cheerleaders in the press – the Daily Mail chief among them – have over the years managed to create a climate of hysteria such that any Government has found it impossible to increase the much fairer income tax.

Oh, and the Government has not created the savings deficit “purely from its taxation policy alone”. In fact, the deficit has arisen almost entirely as a result of the massive increase in disposable income that has been enjoyed since Labour came to power while the amount that people save has remained fairly static.

Whether the taxes raised have been used wisely is a matter of opinion but if Tony Byrne took the trouble to descend from his ivory tower once in a while and visit the real world of schools, hospitals and police stations, he might see the very real improvements that have taken place.

I cannot help thinking that what we need is not so much “more unemployed politicians” as fewer under-employed advisers with too much time on their hands and a political axe to grind.

Jim PattenIFA,Liverpool

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