Osbourne's war on (real) charities

The government's latest attempt to make people of every political persuasion despise them is to dissuade the rich from giving to charity. The current situation, as the BBC describes it, is this...

When higher rate taxpayers donate money to charity, some of the tax can be reclaimed. Effectively they could pay no tax at all, if they choose to give away their income to charities.

This is a very good thing as it encourages charitable giving and the nebulous 'Big Society' that David Cameron claims to support.

But Mr Osborne announced in the Budget that from April 2013 the maximum amount that will be able to be reclaimed in tax relief - including on charitable giving - is £50,000 or 25% of the individual's income, whichever is the greater.

£50,000 is a pittance to some of these donors. You will probably recall that Warren Buffet and several other US billionaires gave away half their fortune to charity recently. Although Buffet has been known to complain that taxes are too low in America, it is notable that he chose not to give his money to the state, but to charities whom he thought - almost certainly correctly - would spend it more prudently.

One of the main reasons why Americans give much, much more to charity than any other country is that they enjoy tax benefits from doing so. But, as the Chief Executive of the Charities Aid Foundation points out, this is not a tax dodge. It is genuine philanthropy.

“This is not a ploy to save tax. Philanthropists who make large donations give away far, far more than they could ever claim in tax relief. That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society.

The killer line came from the "prime minister's spokesman" who delivered this doozy...

"In certain instances they may be giving to charities and those charities don't, in all cases, do a great deal of charitable work."

I certainly agree that there are plenty of charities who do not do a great deal of charitable work. Indeed, there are many charities that seem to do nothing but lobby for legislation, and, furthermore, these charities are funded by the government. That is an issue for the Charity Commission. If that Commission had not been snoozing under the stewardship of Suzi Leather for the last eight years, it might have encouraged some test cases against some of the many pressure groups masquerading as charities which have an undue influence on politics in contravention of charity law.

"We cannot be in a situation where very wealthy individuals are able to wipe out their bills by using these reliefs."

They're not profiting from it, asshole. Whomever they give their money to, donating funds to a third party is unambiguously an act of charity, whereas the state giving taxpayers' money to charity is an act of political patronage. These people are choosing to finance your precious Big Society rather than pay for the state's bureaucracy - a bureaucracy which gives £12 billion a year to charities in any case, including to such organisations as Action on Smoking and Health, the School Food Trust, the Equality Challenge Unit, Alcohol Concern and all the other fake charities that no one would donate to if they had a choice.

You want to remove tax status from organisations which do not do "a great deal of charitable work"? Fine. Start with the fake charity behemoth which Labour created and which you continue to feed. The third sector and the public sector are already inter-changeable much of the time. Let's deal with that rather than impoverishing real charities.

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Sunset clause for minimum pricing?

From The Telegraph:

Drinks manufacturers plan to persuade the Government into agreeing a “sunset clause” on minimum unit pricing, which would force ministers to scrap the controversial alcohol policy if it was proven not to work.

Nice idea, but no dice. What could be more reasonable than assessing a law after a year or two to make sure it hasn't failed or back-fired? This is just the kind of thing that a government who claims to hate "unnecessary legislation" would support, notwithstanding that such a government wouldn't contemplate minimum pricing in the first place.

Strangely, we don't have much of a history of using sunset clauses in the UK, which is good news for our many anti-[fill in the blank] groups who might otherwise see their pet prohibitions put under scrutiny. Instead, they concentrate on the next ban and hope the public forgets the extravagant promises they made about the last ban.

I notice that no temperance groups are quoted in the Telegraph article. What can they say? If they support a sunset clause, the government might seriously consider it. If they oppose it, people might suspect that they have no faith in their ridiculous claims, eg. that a 40p minimum price will save 900 deaths a year.

There will be no sunset clause. There will only be calls for the minimum price to rise to 60p, 70p, 80p, and those demands will never end (see Scotland where a "leading public expert" reckons a 60p unit will save—guess what?—900 lives a year). The only hope is for the EU to rule it a breach of free trade. As with plain packaging, it will be for the courts to decide. Ain't it grand that the Conservative party—the party of the free market—are supporting policies which require arbitration from the European Union and the World Trade Organisation?

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Happiness

A half-hour debate on Russia Today between myself, Saamah Abdallah (New Economics Foundation) and Mark Anielski (author of The Economics of Happiness: Building Genuine Wealth) on the subject of whether governments should focus on Gross National Happiness. I say they shouldn't, because they can't.





You can download the Institute of Economic Affairs book about all of this for free here.

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Anyone else noticed this?

I've had an e-mail from a chap called Andrew who has noticed something strange happen at his local supermarket since minimum pricing was mooted.

I wonder whether you have noticed the drinks industry and supermarket profiteering which has gone on recently following the "minimum price per "alcohol unit" or we all die!" hysteria.

I went to Sainsburys weekend before last and noticed own brand cider had gone up fifty pence. So I left it and looked for alternatives elsewhere. ASDA/Walmart around the corner still sold for the same price.

This weekend I went to ASDA/Walmart and noticed the price of own brand cider had gone up by a third (!). It used to be just over £1.50 and is now £2 (Gordon Brown pushed it up from about £1.20 by a duty hike later reversed - though not in shops). So I left that, too and found the stronger stuff being only slightly more and went for that. Good work, people. Customers will now go for stronger booze because it does not cost much more.

Has any other readers had the same experience?

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Prohibitionist accidentally tells the truth

One of the main arguments made in favour of plain packaging—first in Australia and now in the UK—is that the tobacco industry strongly opposes it.

OK, it's not an argument as such, but in these intellectually backward times, saying "the industry opposes it, therefore it must be good" could be mistaken for one. It is true that the industry went to some lengths campaigning against it in Oz and some of the cigarette companies are now suing the Australian government. Pro-plain pack campaigners portray their opposition as an admission that the policy will reduce the smoking rate.

But this is a fallacy. It assumes that industry (any industry) depends on volume and turnover, when it actually depends on profit. The removal of branding is likely to have a negative effect on profit margins, as I explained in the booklet I wrote for the Adam Smith Institute...

It is no secret that many consumer goods are virtually identical and can only be distinguished by their brand names. Sometimes this fact is so well known that manufacturers make little attempt to conceal it (petrol and salt, for example, are sold with minimal branding), but in most cases industries rely on building a trusted brand in the hope that consumers will pay a premium. Paracetamol, for example, can be bought for a few pence in a generic box or for considerably more in a glossier box with a well-advertised brand name. Bottles of mineral water compete in a multi-billion pound market on little more than brand recognition.

Knowing the power of packaging to imply quality, companies often produce two barely distinguishable versions of the same product and give the budget brand a consciously inexpensive-looking package, even though it would cost no more to make it look glitzier. The same is true of cigarettes which are branded and packaged according to the price point. One in two smokers cannot distinguish between similar cigarettes in blind trials and it is reasonable to expect many of them to downgrade to cheaper brands under a regime of plain packaging. This is the main reason the tobacco industry is so vehemently opposed to plain packaging: its top brands are worth billions of pounds and any government which misappropriates them can expect to be sued, as is already happening in Australia.

I then addressed the question of whether this would be a bad thing. For the zealots fighting their bogus David and Goliath battle with 'Big Tobacco', anything that annoys the enemy is desirable, but what are the public health implications of people turning to cheaper cigarettes?

Should we care if cigarette companies becomes less profitable and are only able to compete on price? If smokers buy cheaper cigarettes from the licit and illicit market, perhaps we should. Price is widely seen as the single most important factor in influencing cigarette consumption, and yet here is a policy that will reduce demand for the most expensive brands, that will encourage the industry to compete by lowering prices and which is likely to stimulate the black market. For the zealots of the anti-tobacco industry, anything that harms Big Tobacco’s profits is a good thing, but in this instance, what is bad for the tobacco industry is also likely to be bad for public health.

I do not claim to be the first person to have pointed all this out. It is fairly obvious. But since the arguments in favour of plain packaging are so weak, its proponents have had to rely on the "industry doesn't like it" angle rather heavily. None more so than scrotum-faced head-banger Simon Chapman, a man recently described by Carl at Ep-ology in terms which are firm but fair.

He is the perfect storm of a card-carrying "public health" person who is harmful to both public health science and the public's health: terrible at scientific/analytic reasoning, and freely promotes junk science; believes that top-down authority, particularly promoting prohibition, is the defining characteristic of public health; will make any sciencey claim that seems to support his political positions, regardless of the lack of scientific support; displays no apparent humanitarian concern despite working in a field that can only be justified by such; is the worst kind of gadfly (parachuting in to topic areas he clearly knows nothing about and making sweeping declarations as if he is an expert); and does not even seem to display much more scientific expertise on tobacco, the subject he has been working on for decades.

He also has an unfortunate habit of listening to the voices in his head and then repeating their words out loud (or on Twitter). This has led to some amusing moments. Today, when anyone criticises his pet project of plain packaging - which he hopes will make him a footnote in history - he plays them the same old tune...

The distinction between volume and profit has been explained to him so many times that we can only assume he is feigning ignorance of it. But lo and behold, last month it seemed that the penny had finally dropped when he was interviewed in the Australian press:

"I received an internal BATA training DVD in the mail about 2002, which featured David Crow [former marketing director, now managing director, of BATA] explaining to his team that the arse would continue to fall out of the market, and that the only hope was to push premium brands which gave them stratospheric profit margins."

"This explains a lot about why they fear plain packaging, because they will struggle to convince smokers that it's sensible to pay more for products that actually only look better because of their box."

By George, I think he's worked it out. And the truth shall set you free! Does this mean that Simple Simon will finally drop this infantile argument? Judging by yesterday's Twitter feed, it seems not...

Hopeless case or hopeless liar? You be the judge.

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Supermarket stupidity

From the Telegraph over the weekend...

SIR – Last weekend I went to Sainsbury’s to buy some miniature cigars, but found the display shuttered. Upon asking what cigars they had, I was told that a new law forbade them from showing or telling me the brands, or even how much they cost.
Whatever justification is given for this censorship, the fact that someone would be breaking the law by giving me information about items that are perfectly legal to buy is a step too far off the road of democracy.

Graham Crispin
Southend-on-sea, Essex

Has anyone else had this experience? I haven't visited a supermarket tobacco kiosk since the ban came in. Is this really the law or is it a case of poorly trained staff gold-plating foolish legislation?

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Why are we paying for this? (part 4)

Dick Puddlecote has lifted the lid on the government's funding of the pro-plain packaging campaign. Bristol Primary Care Trust has given SmokeFree South-West no less than £468,462.06 to spend on billboard, digital and other marketing to promote a policy which the Department of Health has officially not made it's mind up about (it is, after all, due to launch one of its notorious 'public consultations', so in theory it has an open mind).

And what misleading marketing it is. The billboard above is a typical product of the millions being spent by the DoH on the plain packaging campaign. Notice the unsubstantiated claim that plain packaging will "protect children" (from what? - whatever it is, the DoH has previously stated that the evidence in favour of plain packaging is "speculative") and the false implication that plain packs will be, well, plain, when they will actually be used to depict whatever gruesome image takes the fancy of the warped minds of 'tobacco control professionals' (see below). It is questionable whether such images (a) are more suitable for children to see, and (b) really "make cigarette packs less noticeable".

Doubtless the people of Bristol will be delighted to hear that large sums of money are being diverted away from patient care to fund an advertising campaign for this barrel-scraping exercise. This is just the tip of the iceberg, of course. Dick estimates that the national total could be around £5 million. Undoubtedly it will number in the millions. There are 151 PCTs in England alone, and it seems that a good proportion of them - perhaps all of them - are using taxpayers' money to lobby taxpayers and politicians. NHS Devon, for example, gave SmokeFree South-West £370,000 last year. Like the other 'SmokeFree' groups, SmokeFree South-West provide no public services and exist only to campaign for legislation and influence public opinion.

Perhaps I'm very old fashioned, but I always thought it was the people who campaigned for legislation and the government who listened. As the Department of Health tightens its grip on policy-making, those roles seem to have been reversed.

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