Using the data and your knowledge of economics, to what extent do you agree that cuts to direct taxation would benefit growth and living standards in the UK? Justify your answer.

Intro: - Define direct taxation - Define what is meant by growth Concepts to explore: Growth - Implications of tax cuts on consumption levels in the UK - in terms of the propensity to spend, disposable income etc - The effect this would have on AD - consider the effect this would have in terms of employment, business investment, tax returns etc in the long run - Consider the decrease in tax returns - particularly in short run - which may limit government spending - Consider the effects of less government spending on the public sector and/or AD - Consider the implications of increasing government debt from lost revenues on Quality of life - Consider inequality levels - likely to rise as taxation falls - Potentially argue how indirect taxation may be raised to cover shortfall of government revenues - explore how regressive nature of such taxes hurt the least affluent - Consider how growth and quality of life ceteris paribus compliment one another Conclusion: Whilst many pro-business analysts would argue that high levels of direct taxation limit economic growth and propserity, empirically this doesn't have to be the case. Scandinavian countries maintain high living standards and economic growth, whilst countries such as the US - particularly in recent years - have struggled to muster significant growth and are riddled with vast inequality despite low tax rates.