Sugar tax debate

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Excess consumption of sugar is linked to several health problems, such as obesity, diabetes, and tooth decay. Consumption of sugar imposes costs on individuals (lower life expectancy) and the rest of society (higher health care costs + lower productivity). A tax on sugar would discourage consumption and raise tax revenue to fund improved health care. …

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The economic cost of fuel duty freeze

I drive a lot and so am personally affected by fuel duty. The freezing of fuel duty in the past few years has saved me substantial money. But, as an economist I’m dissappointed the chancellor didn’t increase fuel duty. I did get my wish with a new sugar tax – rather unexpectedly, but I was …

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Difficulties of raising taxes

Interesting article by Ken Clarke – lamenting difficulty of raising taxes. Basically, the general public want public spending in key areas, but don’t want to have any increase in taxes to pay for them. Pensioners triple lock very expensive – but will be very difficult to challenge. When people are used to receiving money, it …

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Tax Tolerance

Definition of tax tolerance – the amount of tax that a population is willing to tolerate and put up with. In the western world there are strong political movements to resist higher tax and commit to lower tax rates. The amount of tax a nation is willing to accept depends on many factors. See: Tax …

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2p Fuel Tax Increase Dropped

As widely expected, the Chancellor Alistair Darling cancelled the proposed rise in petrol tax. Keeping petrol tax rates at 50p a litre. I have previously written why I disagree with this populist move – 10 Reasons not to cut Petrol Tax The difficult thing is how the Chancellor is going to finance this tax cut? …

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Council Tax Payments and Pensioners

Readers Comment: I’m a pensioner. Since introduction my Council Tax has increased by 103%,my pension by 29%. Mine is the sole income,why should I pay the same as a family of 4 all working and living in a house in the same tax band;does only one of them receive help from the police, firebrigade, does only one of them create rubbish? No local (income) tax is the only fair answer but apart from Lib Dems is any other party prepared to talk about it. Bill Davies Discuss

Thanks for comment Bill. It is interesting to see feedback from someone’s personal perspective. From my perspective the Council tax is unfair and poorly designed. It was rushed through with the idea  that – anything other than the poll tax must be better. Well, it isn’t the poll tax, but, that is hardly an endorsement. Given how important local tax is and how much it effects people’s living standards, it is suprising that it makes so little impact on the current political scene. The only time we see it on the news is when some 90 year old is threatened with jail for non payment of council tax.

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Council Tax Banding – A Fair Tax?

The argument was that the poll tax was so bad that anything had to be an improvement. So with little thought, the Conservative government brought out the Council Tax. The council tax aims to introduce a degree of proportionality and fairness by charging a tax equal to the value of a house. The argument is that people who are wealthy have a high house value and therefore can afford to pay more.

However, this policy has been widely criticised. These are some of the criticisms of the Council Tax

Problems of the Council Tax

  1. Wealth is not the Same as Income. Just because your house is worth £200,000 doesn’t mean you have a high income. For example, a pensioner may own their own house, but, their pension may give a very meagre income. People living in the same valued house can have widely varying incomes and therefore ability to pay.

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Poll Tax and the definition of a good tax

For those studying Economics A-Level at the moment, you will probably not remember the poll tax. This tax introduced by Mrs Thatcher was probably one of the most unpopular taxes ever introduced. It was widely condemned as being unfair and inequitable. The principle of the council tax was that everyone would pay the same. Whether you were wealthy or low paid, you received the same council services so. Therefore, the argument went, you should pay the same amount. The problem was that if the poll tax was £500, it could be a high % of a wasn’t willing workers disposable income. Another problem with the poll tax was that the amount could vary widely from one borough to another. Some rich boroughs were able to charge very low poll tax; others charged a very high %.

After a long campaign, including the infamous poll tax riots in London, Mrs Thatcher responded to the criticism by offering a rebate, to reduce the cost of the poll tax. But, she wasn’t  willing to compromise on the principle that everyone pay the same amount.

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