Mind boggling economics
Page 44
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SOME CHANCELLORS of the Exchequer think the answer to inflation is to rob the rich. Not so the bold Sir Geoffrey Howe. His approach, so far as I can understand it, is more sophisticated. It goes something like this: First increase VAT from 8 per cent to 15 per cent. This gives the unions the spurious excuse to make extortionate wage demands and jack up inflation an other point or two. • Next increase the price of electricity so that only the rich can afford it and then raise it again to make good the revenue lost in diminished sales. Gas then becomes too cheap and disinflationary, so pile on more scores of unnecessary millions of pounds.
And what about excise duty? Taxes on vehicles, petrol, derv, liquefied petroleum gas, alcohol and tobacco have not been raised for nearly three years and are not keeping up with inflation. This will never do. Put them all up.
I confess I would never have thought of reducing inflation by increasing it, but what else can you expect from a bird-brain?