Friday, 27 June 2008

Number crunching

Cost of maintaing The Royal Family: £40 million per annum.

Direct and indirect funding that political parties receive in each four-year Parliament: £1,750 million

My latest blogpost: Number crunchingTweet this! Posted by Mark Wadsworth at 12:48

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12 comments:

Snafu said...

So how come the Labour party is nearly bankrupt!?!

27 June 2008 at 13:20
Anonymous said...

So that's £1,790m we can save straight away.

The monarchy can then be paid for by subscription. If the tourist trade want it, they can contribute as a form of advertising, as can individuals, as they do for the national trust. Super.

27 June 2008 at 15:11
Mark Wadsworth said...

HH, many businesses in London benefit from tourism - hotels, cafes, shops etc, this spills over into higher rents, even for those businesses that having nothing to do with tourism.

So the simplest funding mechanism is Land Value Tax on London land values, which are higher than in the absence of RF. From there on, it's a simple cost-benefit analysis.

27 June 2008 at 15:38
Anonymous said...

Aha, but... there is no direct feedback in that system.

If the Royal household has to justify it's subscription rates to its subscribers, it will be encouraged to become efficient. With LVT, it is just a small part of a huge budget and can hide inefficiency, as your original figures show.

27 June 2008 at 15:48
Mark Wadsworth said...

HH.

London would at the end of the year do accounts showing total LVT receipts (in the region of £15 billion, if it replaced Council Tax, LVT and Business Rates) and how it was spent. Some would go on London Transport, some on the police etc, and expense item #234 would be "Her Maj & Co - £40 million".

Even if the land/buildings you own is not used for tourism-related stuff, you still benefit from the presence of the tourism industry (which in turn benefits from presence of Her Maj & Co).

Think about it, if there were no Her Maj & Co (or free galleries, Tube network, fresh turf on Leicester Square every couple of months etc) then there'd be less or no tourism industry. So rents (and hence land values) would be lower as less businesses would be competing for the same space)!

27 June 2008 at 16:02
Anonymous said...

But you can use that argument to justify the spending of tax money on anything

So, you would have all arts funded by tax (benefit from tourism). All house improvements (benefit from tourism). My private project to do up a load of old houses (area become nicer, peoples house values increase, money from the taxpayer for my improvements, please ~ they are getting an undeserved benefit), all agricultural subsidy (oh look, pwetty countryside, benefit to tourism and land values, tax cash please), and on and on and on.

Whilst you and I can argue until the cows come home about how to fund the minimal safety net state, as libertarian anything non-essential should be privately funded. The royalty may be 'self financing' in terms of tax take, who knows. Who cares. If Northern Rock becomes profitable again (don't laugh ;-) ) should it remain in public ownership?

The Royal family are non essential items. The state should have no part in their upkeep.

Subscription delivers this and adds the benefits of free market efficiency.

27 June 2008 at 16:11
Mark Wadsworth said...

"But you can use that argument to justify the spending of tax money on anything"

No you can't, that is the point!

Bobbies on the beat clearly adds to land values, but 5-a-day-advisors don't. If the council spends the all its money on 5-a-day-advisors instead of bobbies, then crime rises and land values fall and hence council revenues fall, so they have to sack all the 5-a-day-advisors again.

And LVT is a tax on land values - the value of the improvements you make to your homes is not taxed!

But if you refurbish a load of derelict homes and sell them/let them to nice people, then surrounding properties benefit (less vandalism, rats, crack dens and squatters), so their LVT bill might well go up - and why shouldn't it? They have not contributed towards your expenditure, even though they have benefitted from it! And with that extra money, the local council will, hopefully, pay for yet more bobbies, or better transport links or whatever, so that you in turn can charge your tenants higher rents and so on in a virtuous circle.

27 June 2008 at 16:25
Anonymous said...

You misunderstand my point. We were discussing the funding of the Monarchy. You argued that because everyone benefits because of increased tourism, it should be or can justify being paid for by taxation. All of the examples I cited can be argued that they will increase tourism, thus the same logic can be used to say that they should be paid for by taxation.

You can then take this further to justify the expenditure of tax money on anything at all ~ i.e. this might not benefit you directly, but is does indirectly (increased values), so cough up. You say you can't use it to justify spending on advisers ~ but you can 'clearly' show that spending money on bobbies will increase values. Well, Fred reckons he can show 'clearly' how spending money in race relation advisers reduces riots, or culture advisors bring tourist friendly plays to town, etc, all of which will increase values. CBA isn't a science is huge systems like this, they are just too complicated to model.

As a libertarian ~ I just don't care. The state should have a minimal role. Very minimal. The Royal family, nice plays, race advisers, etc shouldn't figure in that role at all.

Once you then have that simplified role in place, CBA may be slightly more accurate, but by then it is virtually irrelevant because taxation is paying for so little.

Finally, you know damn well I understand that LVT is based on 'unimproved' land values you naughty boy ~ as we have had a debate about defining 'unimproved' in the past! That isn't what I'm discussing here.

27 June 2008 at 16:51
Mark Wadsworth said...

HH, I agree that having a levy (i.e. a tax!) on those who benefit most from RF to fund the same RF is a good idea!

All we are arguing over is the precise definition of who benefits. You say "the tourism industry" (defined as...?) and I say all landowners in and around Central London.

And following your logic, "the tourism industry" (as defined) would of course pay for free museums and a fair share of street sweeping, policing, public transport etc. all of which make London more attractive to tourists.

So even if you did it your way, the CBA is nigh impossible. How is a hotelier or restaurateur to know whether it would be better to spend a bit less of the "tourism levy" on free museums and spend a bit more on have "trooping the colour" more often? Or perhaps neither represents good value for money? Or perhaps tourism would increase if more were spent on bother categories?

And as to 5-a-day-advisors, who gives a shit what 'Fred' says; when you get your expense statement from the council you will thinkg "Fuck me! They have spent X per cent of my LVT on crap! I am going to vote for the other lot next time! Either they'll spend it on something sensible, or indeed, cut the LVT % rate." If next year a load of riots break out, well fair enough, we re-employ a few race relations advisors. It's all trial and error.

27 June 2008 at 17:07
Anonymous said...

Ah, but it isn't a levy ~ it's a voluntary subscription. Those who would subscribe would be those who thought they would benefit. Ditto the arts. Queeny would then be tempted to be efficient, as this would make it much more easy to sell subscriptions.

The hotelier would have to do his market research, as I have to when I have to decide if I should spend more money with Yell, internet advertising or sponsoring the local egg and spoon race. Sure, the hot dog guy gets a free ride from my egg and spoon race, but if I thought the benefit to me was negligible and I pulled out, he would have to take a view as to either sponsoring it his self, or loosing his sales opportunity. In reality, I would probably approach him and suggest a sharing of costs.

As for sweeping, policing, etc ~ cool. Let the local community decide what and how the minimum is, and business' that think they would benefit from more could add to this. They do this anyway ~ McD's litter patrols, private security guards, etc. But you have to have clear national restraints on what councils are allowed to make compulsory via tax. This ends the Fred and his race advisers problem.

27 June 2008 at 17:20
Anonymous said...

I can't see any mention of funding the Monarchy through taxation in there ;-)

28 June 2008 at 14:57
Snafu said...

Cost of maintaining the BBC? £3.3bn!

29 June 2008 at 17:23

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