This is my reply to your suggesting this in the election thread:-
5p in the pound is an extra £1250 a year for someone on average wages, sadly I don't believe that the majority would stand for it, they would view it as them being turkeys being asked to vote for Christmas in order for some chickens to get a nicer coup.
Despite me agreeing with you, at least in principle, that it's a good idea, ask yourself the question, can you afford to pay out an extra £1250 each year? Maybe you can but very many are either in debt up to their eyes or are unwilling to forego that night in the pub once a week that this money currrently pays for. You also have to consider that for most households that would actually be £2500 a year due to there being 2 wage earners in the house.
After that it starts to get really complicated, when the local landlord notices that he has 20 fewer customers every Friday, as the money they normally spent in the pub is now going in taxes to fund government spending plans (which may well be very worthy), and his takings are down by £500 every Friday he has to lay off some bar staff, he will also order less from the brewery, as will many of their other client pubs and customers, and the brewery soon has to start laying people off too. All these people that are layed off also have reduced spending power which causes a drop in takings at the supermarket and in cloathes shops, which in turn causes layoffs there and the cycle continues, pushing the country deeper and deeper into recession with fewer people earning a wage and less tax being paid which then negates the increase in the tax rate, so it's all been futile AND there are more unemployed.
Now I understand that the government spending will offset some of this effect but the job losses in the effected sectors will be real despite possible job creation in the public sector. Ok so you may well prefer to employ a nurse rather than 2 barmaids but the simple fact is, there are currently not enough qualified nurses in the UK, hence the proliferation of immigrants working in the NHS, so the unskilled barmaids will be unemployed, paying no tax and drawing on social resources and another immigrant moves to the UK to work (nothing wrong in principle with that, I'm an immigrant myself) adding yet more strain onto an already overloaded infrastructure.
This is just a bite sized piece of the picture and it's way more complicated than the image I have painted here but any economist will tell you that the type of command economy that socialism requires, the tax and government spend to create growth theory, only works when it can be propped up by additional money coming from external sources, it's this money that allows the additional spending that isn't funded by increasing the tax burden and subsequently stifling the economy. What external sources are these? Well in Norway we have a mass of oil wealth per capita but in the UK and most countries that money comes from public borrowing and the problem with this is that it has to be repaid at some point and due to the irresponsible bankers causing the crash of 2008 and the questionably responsible bailing out of said banks, the UK is already in debt up to its eyeballs. As Margret Thatcher once said, the trouble with socialism is that at some point you will run out of other people's money.
The only way to genuinely generate new wealth is by creating things, building things and selling them, preferably exporting them in order to relocate wealth, that is curently in foreign hands, to the UK and this is what the capitalist free market does better than any other form of government. However, on its own, the capitalist market is selfish and greedy and will abondon the weak and the poor in order to create more wealth for the rich. This is why we need regulation and reasonabl taxation but the moment you start to tax to the level that people stop spending you enter the downward spiral of the socialist economy. From what I can see, a 5% tax increase would do pecisely this.
