CITY AND SUBURBAN
Happy new year, and the sage of Chicago says paying all that tax is bad for you
CHRISTOPHER FILDES
Iwould wish all my readers a happy new tax year if this were not a contradiction in terms. New Year's Day is on Monday, and if you have a house and a mortgage, your tax relief will be cut by a third. You missed that change, last month, in Gordon Brown's budget? He did not single it out. He had cleverly tucked it away in an earlier budget, nine months ago, as one of those postdated cheques on the taxpayer pio- neered by a Tory chancellor whose name escapes me. We can add it to the two dozen different taxes that we pay already, three of them invented by the nameless chancellor's Tory successor, called Kenneth Clarke. From Monday onwards we shall be working for the present Chancellor, and his taxes will absorb every penny of our income until the first week in September. After that he will graciously let us hang on to it — that is, until the end of the tax year, when the whole process starts again. The Adam Smith Institute has called our day of tem- porary deliverance Tax Freedom Day, and you may like to know that in the new tax year it will be even later, by two days, than it was this year. Alternatively, you may find the whole thing too depressing to contem- plate. You might even think it would not be so bad if all this money being vacuumed from your wallet seemed to buy something that was proportionately worth having. There is more to this sensation than the disgruntlement brought on by the taxman's brown envelopes landing on the doormat. Powerful economic forces are at work here, and Milton Friedman, the sage of Chicago, has charted them. His explanation is pleas- ingly simple.
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