Friday, 28 March 2008

Consumption taxes

All politicians, i.e. people who don't understand economics but who are somehow in charge of meddling in the economy, love talking about "shifting taxation from production to consumption"*.

The argument is that taxation of production/income deters income/production (A Good Thing) and taxation of consumption deters consumption (A Bad Thing); hence the stated aim of those who favour consumption taxes must be to deter consumption.

Taking mortgage lenders as an example, there are two methods of deterring consumption (i.e. the taking out of mortgages):

Method 1 is to increase the interest rate on mortgages by half-a-percent (which is what would happen if we made mortgage interest subject to VAT, for example).

Method 2 is for each bank or building society to position a pair of ravenous Bengal tigers outside its branches.

Now, would any politician suggest chaining up ravenous tigers outside every bank, cinema and retail outlet to discourage consumption? How the f*** are the people who work in said banks, cinemas or retail outlets (and their suppliers) supposed to earn a living?

* They're all at it - from the Red Chinese, via the CDU-SDP coalition in Germany and the the Tories all the way to the right wing nutters in the USA.

1 comments:

Anonymous said...

I've got it. Why don't we just tax socialists?