Monday, 14 October 2013

Aggressively Regressive

I've written a new report for the IEA about sin taxes and stealth taxes which has been covered here, here, here and here. It looks at the role of indirect taxes in Britain's much-discussed cost of living crisis and their impact on the poor in particular.

When it comes to green taxes, fuel taxes and 'sin taxes' on alcohol and tobacco, left-wingers are strangely indifferent to the undeniably regressive impact on the poor. It seems that they just don't care, or at least that they care less about the cost of living than they do about their pet causes of environmentalism and public health.

People in the bottom fifth of the income stream spend, on average, 11.4 per cent of their disposable income on sin taxes (not the products, just the tax!) and spend a further 10.3 per cent on VAT. If they smoke or drive a car, they pay significantly more.

It seems to me that a good first step to tackling poverty would be for the government to stop taking money from the poor—money which has often been given to them by the government in the first place.

I've written a short blog post about this for the IEA and you can download the report for free here.


Iain Clark said...

Middle class left-wingers are mostly in the mold of Victorian do-gooders who want to improve the lot of the working classes in the way they see fit and if the workers don't want to be improved in that way they can sod off.

The occasional old lefty dinosaur like John Reid will oppose them (as he did over the smoking ban) but the middle classes took control of Labour long ago.

Iain Clark said...
This comment has been removed by the author.
Jean Granville said...

The logic of redistributive taxes has always been weird. For instance, I don't know if you have or had special taxes on "luxury goods" in the UK, but the very principle of these taxes is to punish people who buy "luxury goods", and their result is to prevent poorer people from buying them.
Now, if you ask a socialist why he supports taxes that are "regressive" on tobacco, he will answer that it actually helps the poorer people to get away from smoking, so it's actually a social policy.
They can answer anything.

Jean Granville said...

It would be nice if IEA reports were available in epub format rather than pdf. pdf is a pain to read on a smartphone.
What the hell, let's ban pdf.