Arthur Laffer on VAT, taxes, prosperity and the economy

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27 June 2012 Last updated at 06:20 ET Help

A former adviser to President Ronald Reagan, and the inventor of the "Laffer Curve", claims lower taxes - and the same tax rate for all - would bring in more money for the government and create prosperity.

In an extended interview with Andrew Neil at the Institute of Economic Affairs, Arthur Laffer said the government should cut VAT and claimed the UK's 20% level was a "disincentive for people to work, produce and create output".

He claimed lower capital gains tax in the US brought in more money.

He also suggested politicians should be paid on commission, with them receiving more more money if the unemployment rate fell, before praising the economic policies of Ronald Reagen, Margaret Thatcher, Tony Blair and Bill Clinton.