Quote:
Originally Posted by mariners_fever
Indeed, and I have indicated agreement that it is always more sound to cut a lump sum tax, however many would agree that a cut in any type of tax serves to increase consumption.
Likewise, many economists of all stripes agree that Government spending should stay at about 20% of GDP. Because we are far above that point, it could be argued that we've done of the other side of the inflection point of the Laffer curve.
But I do agree that cutting GST was imperfect, but not necessarily bad either.
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The Laffer curve inflection point is the point where government revenues drop (estimated to be around 70%, globally), whereas the 20% recommendation you cite is presumably derived from net public benefit - a very different criterion that yields a very different result.
Of course, the Conservatives also made huge increases in spending even before we went into recession.