3.5.2 Levels of Government Spend and Taxation
The previous section (3.5.1) focused on finding a formula for sharing the burden of government spending. This section reviews the controversies over determining its scale in the context of the overall health of a country’s economy, recognising that it should never be regarded as a ‘blank cheque’ because those who pay the most should be able to feel that the expenditure is justifiable. In short, there are two sides to economic reciprocity.
From a purely economic perspective it is possible for private individuals and companies to provide everything that a State might provide, with each person being responsible for paying their own way; those who were unable to pay for themselves might be looked after by family members, or by private charities on a voluntary basis. Individualists would tend to prefer such a policy. In complete contrast, a collectivist policy would require the collection of taxes to fund transfer payments and public services, to ensure that everyone can have access to the services that they need. In short, the scope of government spending is hotly contested – but a compromise is essential, for government to function.
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