This is of course a woeful state of affairs as the ability of governments to spend other people’s money wastefully is endless. The ability of governments to spend other people’s money in a useful fashion has always proven limited. The road to prosperity involves empowering innovation, they know so much better than the wealth creators how to run a better planet.
You and I ought to know that governments are lousy, > inefficient allocators of resources. Actually if you put government in charge of the desert, they will run out of sand. This discourages taxpayers to pay generously. True, some corporates and individuals go to extremes and are worthy of contempt. You cannot advocate for fair play if one team, the government, is not playing fairly.
Tax avoidance is on the rise. Bankers now smuggle diamonds in toothpaste tubes and this demonstrates a remarkably lax sense of fair play. Likewise multinational companies with zillions in turnover barely pay a penny in some jurisdictions. This means that they are milking the system unreasonably. Then again just what legitimacy do incompetent, often corrupt government agencies retain to collect other people’s money and spend it injudiciously?
Ultimately government must be weaned off its spending addiction. Tax codes need to be simple and rates flat. Government must shrink. Trust the citizens and they will be empowered to generate prosperity from the bottom up. No government ever created long-term prosperity with tax. A government that thinks of using taxes to foster prosperity is like a small child who thinks that he can stand in a bucket and lift himself by the bucket handle.
Every time government exercises fiscal indiscipline the tax payer shoulders the burden. More billions are always spent on recurrent activities while a paltry figure goes to development. Most recurring expenditures include personal emoluments, operations and maintenance activities. A big chunk of taxpayers’ money also goes on foreign and domestic travel, on training, hospitality, conferences and catering services. All this money is easier spent than earned. In principle recurrent expenditure should be incurred in support of development work being undertaken and not wasteful and luxurious programs.
There is need to curb unnecessary foreign trips and local meetings in exclusive retreats and other wasteful government expenditures. Otherwise exorbitant expenditures only demand for rise in taxes.
When taxes rise, the citizens and businesses of a country pay more of their income to the government. This can create a disincentive to invest in business, as investors will necessarily receive a smaller return on their investment. Businesses, in turn, may be discouraged from expanding, as the profits they make will be curtailed by a high tax rate. This discouragement can have many dire effects on a country related to the retardation of its economy.
