At a macro level, no money is removed from the economy, but at a micro level it is. You see, if people are taxed more they then don't have money to spend unnecessary items (like luxuries). One way to increase taxes is to increase duty on luxury items, for example PC's could be normal items, whilst large LCD monitors and TV's could be classed as luxury items. Same with cars above R250,000. All cars, not just gas guzzlers, except for electrical cars. My problem at the moment is that our inflation is partly increasing because of the huge fiat money supply in our economies. At the same time, our government is struggling to finance a huge infrastructure improvement program. I believe the way to finance this program is with taxation, rather than with debt. Trevor Manual and his colleagues have done an amazing job these past 13 years to get rid of the national debt - and look how long it took! At the same time, they have allowed Joe Public (not my real name) to catch up with their lifestyle. Now it is time to put cash into infrastructure. For me increasing taxation takes money out of my back pocket without causing a slow down in structural investment; ie one could see a situation with an interest rate decrease and a taxation increase thus improving the accelerator without increasing the multiplier.