taxes

Sugar tax debate

Sugar tax debate

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. Yet, critics argue that it is a regressive tax which takes more from those on low incomes.   Arguments for a sugar tax 1. External costs. Sugary drinks…

The economic cost of fuel duty freeze

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 very happy the government could see how a sugar tax could deal with some of the externalities of excess sugar – such…

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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 is very difficult to take it away. “Electoral bribes, handing out money to people of all ages, has got out of hand. The trouble with electoral bribes is that they are damned difficult to take back…

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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 Rates by country For example, the strongest tax resistance movement is probably in the US, despite it’s tax levels being lower than in Europe. This perhaps reflects the US (28% of GDP) preference for individualism…

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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? (£2.6 billion)Government Borrowing is already reaching record levels. Stamp duty tax is falling A recession would lead to lower income tax and VAT revenues. People don’t like paying petrol tax, but, I doubt they will be overjoyed to…

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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…

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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…

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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…