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Pretty sure that argument doesn't actually work, though the reason why is a little subtle. Sure, the money doesn't stop at its first use, but whatever goods or services the money is spent on by consumers do. That is, if this tax revenue isn't replaced by some other equivalent source of tax revenue its disappearance will increase the amount consumers have available to spend in nominal non-inflation-adjusted terms by £35 billion a year without creating any correspending increase in the goods or services available to purchase - the government still needs to do all the things that were "funded" by that fuel duty and road tax after all.

This is not in any way offset by the fact that whatever that money is spent on is subject to VAT, causes wages to be paid that are subject to PAYE, and so on, even though it sems like it would eventually cause all the money to end up in the government's pockets anyway. The VAT when that money is initially spent is included in the £35 billion figure, and any taxes after the money is spent are irrelevant since the money had already become actual, final consumer spending involving actual consumption of goods and services.

This is a much more useful way to think about taxation and the need for tax. By your logic, the actual tax levels don't matter - 100% of money will end up in the government's pockets eventually after all.

"without creating any correspending increase in the goods or services available to purchase"

Why would it not create more to purchase? If you go into a hairdresser with money in your pocket do they work harder to get the queue down or shut the shop and put the prices up.

The limit is actually available unemployment/underemployment, even now we still have millions without work that want it, less the increase in the level of saving. More saving = more space.

Hence when Tories decry their proposed tax cuts as 'debt fuelled', they really ought to hope that they are since that will reduce inflationary pressures.

> a sovereign government has no need of revenue in the first place.

Please explain this. Are you suggesting governments can just stop taxing, and print the money to pay their debts with no ill consequences?

I'm not an economist. But I can see inflation being thought of as a type of tax.

I'm not sure what kind of incentives that creates, and if those incentives are better or worse than the incentives existing taxes create.

So, maybe?

Off the top of my head, some results would be:

1. No one wants to lend to your country again because you paid them back with currency far less valuable than expected

2. Nobody wants to use your currency as a means of exchange in international transactions because it can fluctuate suddenly

3. Massive redistribution of wealth from savers and lenders to borrowers (maybe a good thing on the whole, but devastating for people headed into retirement)

4. Anything (including govt. programs) that aren't indexed to inflation are suddenly far less valuable

All of your post assumes that when government creates money, it causes inflation, and when private banks create money, it causes no inflation. No such distinction exists. Most money is created by private banks.

I know most money is created by private banks. But that is stable (it is assumed by ceteris paribus). If a government decided to stop taxing then that would be something new.

Is a good assumption that money created by private banks more stable than government created money? what economic mechanism provides such guarantee and what is the evidence?

Private banks used to be able to print their own currency completely: in one country each bank would have different money that coupd be redeemed for gold, and wasn't backed by the government. That was very unstable.

We basically stopped taxing multinationals after the end of cold war, we do have something new.

People think government works like a household budget - it doesn't. Think about it - who controls how much money is the economy?

Does someone measure 'okay the economy has grown 5%, it needs 5% more money to be printed?" No, nobody does that.

If the government prints zero money, the money supply can still quadruple, because banks create money out of thin air.

Which is exactly what they did prior to 2008. The reason government had to 'print' miney in 2008 is that they were replacing all the 'unsupported' money that was creates by banks, and then suddenly imploded.

As soon as you suggest government should print money everyone starts screaming inflation, but when private banks do it, noone blinks an eye.

The rules that allow banks to create money have changed dramatically over the past 20 years, and nobody is even discussing it.

The money that banks create by fractional reserve lending is (at least somewhat) backed by real assets. The money that governemnt 'prints' is backed by nothing.

The money government prints is backed by the best asset of them all - the power to recover it as taxation.

Paying the tax to the tax collector is far cheaper than the alternative amount you end up paying to the bailiff when they confiscate all your assets.

Taxation is, ultimately, the only 'reserve' asset there is. And as you can see it is very definitely backed by real assets. All your real assets.

We have not operated fractional reserve banking for generations.

A bank today can give out loans and mortgages without any assets.

https://positivemoney.org/2011/04/monetary-reform-myths-1-10...

I can't do any better than Beardsley Ruml, Chairman of the Federal Reserve Bank of New York, who explained it in the 1940s. [0]

[0] http://home.hiwaay.net/~becraft/RUMLTAXES.html

Who says they have to spend that money? What if they instead throw it in a tax-free savings account and use it to buy stocks & bonds?

Buying stocks and bonds is spending the money. You've given the money to somebody else in exchange for something. Now they have the same choice as you did - spend or save.

If you save it in a tax free savings account even better. The bank holding the offsetting reserves then does the buying via the DMO cash management process.

UK fuel duty as a percentage: https://www.racfoundation.org/data/taxation-as-percentage-of... - currently about 45% down (amazingly) from more or less 60% since 2013.

I kind of understand your argument, but net-income in my pocket that's not spent on petrol will be spent on some sort of goods or services that has VAT on it, which is 20%. So, yes, I might spend more on goods and services, which might mean more computer shops, clothes shops or restaurants and take aways, and they in turn might grow the economy a bit, but would that convince the government to _not_ reintroduce some kind of road charging?

>>firstly because you can't rely on it and secondly because a sovereign government has no need of revenue in the first place. That's not the purpose of taxes!

Soo much wrong here...

Revenue should be the ONLY purpose of taxation, and falsehood that sovereign government steams from a combination of fiat currency and MMT, which when combined and executed on like you are implying lead to inflation can currency collapse (in the extreme)

governments SHOULD NOT use taxation to pick winners and losers, nor to legislate morality, they should use taxation ONLY to collect revenue to projects and programs approved by the people, and for no other purpose

Taxing activities that have negative externalities is a positive use of taxation.

It's better than forbidding such behavior for many reasons. The simplest reason is that it's better to make revenue dis-incentivizing something bad (pollution) as opposed to dis-incentivizing something good (income).

To the extent that I would agree, it would IMO only be ethical for a government tax negative externalities to directly pay for mitigation, control, etc , i.e a carbon tax that directly goes to carbon removal / capture.

taxing exernalties then using the money for unrelated projects i.e taxing cigarettes to pay for schools, is something I would oppose

Taxing negative externalities works to reduce those externalities even without mitigation though. I’d much rather have a government that taxes things we want less of than things we want more of. The status quo is income tax, which is far worse than any Pigovian tax.

When you're arguing SHOULD, you're not arguing DOES.

(You're also wrong about the inevitability of currency collapse.)

>When you're arguing SHOULD, you're not arguing DOES.

As is the person who I was reply to, their comment was that the government should not need to view taxation as revenue, I disagree

>You're also wrong about the inevitability of currency collapse

In the extreme of the parent comment, were a government ceases taxation (since they do not need the revenue) and just prints money to pay for everything the collapse of that currency is inevitable.

How do you feel about relatively high taxes on alcohol and cigarettes? I enjoy a good beer, but I understand the reason for alcohol tax. Do you also favor low cigarette taxation? The "end of life" costs for heavy cigarette smokers cannot be overlooked! Also, the UK had a lot of success with the sugar tax.

I guess that depends on what you define as "success" going along with the not using taxes to legislate morality, I also do not believe it is the role of government to protect someone from their own bad choices (i.e sugar or cigarettes), going along with this is one of the reasons I oppose a single payer government run health care system in the US, because if we have a UK style health system then adding in all of these legislative actions to control every aspect of a persons life becomes a valid cost control argument

I dont want the government telling me what I can or can not eat, or setting tax policy on their recommendation. I also grew up with the food pyramid as the "government approved" diet that today most people agree is terrible, and if it did not directly cause it heavily aided in the obesity epidemic we have today (in the US).

Distrust in government is our (the US) founding principle, and I have a HEAVY distrust of all government experts. As one of our presidents famously said "The nine most terrifying words in the English language are "I'm from the Government and I'm here to help"