In this interview, former Institute for Fiscal Studies Director Paul Johnson joins IEA Executive Director Tom Clougherty to discuss the major fiscal policy trends in Britain over Johnson's 14-year tenure. Johnson offers a comprehensive analysis of how the UK tax system has evolved under Conservative governments, highlighting the surprising increase in tax progressivity and the record-high tax burden as a percentage of national income, which has risen from around 33-34% historically to 38% today.
The discussion explores challenging fiscal realities facing the UK, including rising public debt, increasing demands on public services, and the impact of recent global economic shocks. Johnson provides thoughtful commentary on the structural issues within the UK tax system, including problematic thresholds, the "impoverishment" of high earners, and what he calls the "tyranny of the status quo" that prevents meaningful reform despite broad expert consensus on what changes are needed.
As he prepares to step down from the IFS this summer, Johnson shares his perspective on growth-enhancing reforms, the significant constraints on public spending reduction, and his assessment of the current government's rhetoric versus action on economic policy. Drawing on insights from his book "Follow the Money," Johnson offers viewers a balanced and informed examination of Britain's fiscal challenges and potential paths forward in an increasingly uncertain global economic environment.
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