The upcoming UK Budget statement is more than an accounting or economic exercise—it’s politics in action. Chancellor Reeves faces a defining challenge of modern governance: how to finance public demands and defence commitments while adhering to strict fiscal rules and Labour’s promise not to raise Income Tax, VAT, or National Insurance rates for working people. This episode explores the politics of taxation, arguing that tax choices are fundamentally political and at the heart of a state's capacity. Drawing on comparative analysis with countries like Sweden and the United States, Prof. Patrick M Kuhn looks at how the institutional structure and commitment devices structuring UK fiscal politics affects tax choices, including the abrupt Income Tax U-turn in the run-up to the budget statement. Discover how self-imposed constraints and the political necessity of keeping highly visible manifesto pledges force governments to pivot toward less visible revenue streams, like the highly effective but regressive “fiscal drag”. While politically pragmatic, this approach leads to an increasingly complicated, less efficient, and less progressive tax structure. Tune in to uncover why UK policy choices are politically predictable but economically perilous, locking the government into incoherent tax adjustments to avoid political self-immolation.

To learn more about Patrick and his research, visit his website at https://www.durham.ac.uk/staff/p-m-kuhn/

Literature:

House of Commons Library 2025. Tax Statistics: An Overview. Online at https://commonslibrary.parliament.uk/research-briefings/cbp-8513/ [Last accessed on 21/11/2025].

Kiser, Edgar and Steven M Karceski 2017. The Political Economy of Taxation. Annual Review of Political Science 20, 75-92.

Schumpeter, Joseph A. 1991 (1918). The Crisis of the Tax State. In Joseph A. Schumpeter: The Economics and Sociology of Capitalism, edited by Richard Swedberg, pp. 99–140. Princeton, NJ: Princeton University Press.

Steinmo, Sven H. 1996. Taxation and Democracy: Swedish, British and American Approaches to Financing the Modern State. New Haven; Yale University Press.

Swank, Duane and Sven Steinmo 2002. The New Political Economy of Taxation in Advanced Capitalist Democracies. American Journal of Political Science 46(3), 642-655.

Music: The Good News by SHANTI from https://tunetank.com/track/263-the-good-news/