Saturday, March 24, 2012

Tax, cigarettes and government logic

The Tories' amazingly selective notion of "people taking much greater steps than anticipated to avoid paying the tax".

You may have heard the feeble and glaze-eyed argument from government ministers that the 50p tax is being abolished on the grounds that it raised "next to nothing".

Let's leave aside the semantics of defining £1.1bn as "next to nothing". And let's also forget the fact that in no other field would a government come up with such a sweeping judgement so prematurely, after just twelve months from introducing whatever measure.

Let's just concentrate on how crook-eyed this government can be.

On one side, Tory George Osborne is so cocksure about the 50p rate "not bringing in enough money" and "forcing" the wealthy away from Britain, so he gets rid of it. Fine.

Except that, on the other, he increases by 8% an already sky-high tobacco tax even though HMRC already said that "smuggling and crossborder shopping cost HM Treasury up to £3.6 billion in lost tax revenue in 2009/10".

How does it work?

How can they think that a tax that was at least bringing in £1.1bn can be scrapped on the basis that "some wealthy people took much greater steps than anticipated to avoid paying the tax", while another that is costing the government £3.6bn in lost revenues (that is to say, tons of people sidestepping it) gets jacked up even more?

How can the notion that "people taking much greater steps than anticipated to avoid paying the tax" be applied so selectively?

PS. Note that this blogger is not a smoker and that he's not discussing the merits of either tax. I actually agree that tobacco should be taxed given its direct burden on the NHS. The point is the ridiculousness of the Tories' illogic.

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