conservativehome: Adam Smith Institute backs replacing Council Tax with Sales Tax

Slug path

asi-in-the-news/asi-in-the-news/conservativehome-adam-smith-institute-backs-replacing-council-tax-with-sales-tax

Joomla-id

4122

Old Teaser

The Adam Smith Institute has an important new report out, Zero Base Policy, by their President, Dr Madsen Pirie, outlining a radical agenda for the next Government. Scroll down to page 17 for the section on local government. It includes proposals for the Council Tax (which only raises a fifth of what local government spends) to be replaced by a Sales Tax. "Those who have lived in or viisted the United States have seen how smoothly it has worked there," says Pirie. Not many cross state boundaries to pay a lower Sales Tax. To the extent they might do so more in Britain, as a smaller country, that "would spur local authorities to keep the sales tax low."

Rather than the Government collecting VAT and giving grants to councils. VAT would be cut, or scrapped, and replaced with a Sales Tax. The Sales Tax would be cheaper to collect and better reflect ability to pay than the Council Tax.

The report says to restore local democracy there is a requirement "to remove the detailed directives by which national government dictates most of the activities of local government."

Would people notice the amount they are paying with a Sales Tax? They certainly notice the Council Tax. The report proposes a referendum on the annual budget for each council.

What do you think?

Published on conservativehome here.

Next Government given shopping list

Monday, 14th September 2009

The Adam Smith Institute gives the next government a "shopping list" of policies needed to rescue Britain. In a report "Zero Base Policy", released today, the Institute's President, Dr Madsen Pirie, says minor change to existing policies is no longer an option, given Britain's dire economic and social fabric. Instead the need is for "zero base" policies to provide new and effective ways of achieving policy objectives.

Topping the agenda is economic change. The ASI sets out measures to turn Britain from a high tax, high debt economy into one on the virtuous circle of low taxes and increasing growth and revenues. The ASI calls for rejection of the Treasury's 'static' model of the economy in favour of a 'dynamic' one which factors in the growth impact of lower taxes.

The ASI proposes to lift the low paid out of income tax by raising its starting threshold to £12,000 p.a., corresponding to the minimum wage, or about half the average wage. This eliminates the need for vast welfare transfers to low earners by letting them instead keep what they earn. At the top end the ASI proposes to expand the tax base by successively raising the threshold for the 40% rate until no-one pays it.

They propose overhauling local finance, replacing Council Tax by local sales taxes as in the USA, and setting business rates locally. A radical innovation is their call for local budgets to require popular vote approval before coming into effect.

Civil liberties are to be addressed by the ASI's call for a one-year judicial commission to review them and make recommendations. Meanwhile the ASI report calls for public body CCTV surveillance to be limited to police and security services, and for anti-terror powers to be restricted to cases of suspected terrorism.

Controversially, Dr Pirie describes government policy on drugs as a failure, and calls for a total rethink, under which most narcotics would be made available at medical centres, and the production and sale of recreational drugs legalized under controlled conditions.

The ASI sees the biggest opportunity for reform in education, and calls for parents to be permitted to use their child's education allowance at any school which is non-selective and requires no additional top-up fees.

Regulation is to be addressed by the use of 'sunset' clauses under which regulations expire unless specifically renewed, and for regulation to be implemented by case law, with the findings of tribunals and juries filling in the details of broad statutes.

The shopping list contains 33 radical objectives which it calls upon the next government to pursue, including the abolition of regional tiers of government and agencies, and the phasing out of most capital taxes. It closes with a call for the MPs representing English constituencies to be constituted in Westminster as the English Parliament, with powers similar to those enjoyed by the Scottish Assembly.

"The list," says Dr Pirie, "sets out the objectives which could turn Britain around. While they could not all be implemented within a single term, they should constitute the goals to be aimed at."

Slug path

next-government-given-shopping-list-

Joomla-id

4113

guardian.co.uk: It's time for a U-turn on drugs

Slug path

asi-in-the-news/asi-in-the-news/guardiancouk-its-time-for-a-u-turn-on-drugs

Joomla-id

4111

Old Teaser

Written by Dr Madsen Pirie

UK drug policy is a spectacular failure. Decriminalisation is the only way forward

The Adam Smith Institute today urges the next government to rethink policy from first principles. Its book, Zero Base Policy, will nowhere be more controversial than on narcotics. It suggests that Britain's drug policy is "one of the most spectacular failures in history. Dozens of initiatives spread over many decades have left Britain with more addiction, more drug use, more drug-related crime, and more drug-induced health problems."

Dealing with drugs costs money. The Department of Health and the Strategy Unit put the costs of drug use at £15bn-£20bn per year. Although ministers and police officers have uttered tough phrases such as "zero tolerance", drug crime has steadily increased, not diminished. When a policy achieves the opposite of what was intended, rarely is more of it needed.

The ASI urges a different approach, recognising that addicts need medical help, not punishment. Many who could be helped medically avoid seeking it because drug-taking is illegal. When drugs were decriminalised in Portugal, drug addicts chose to undertake treatment.

Drug addiction should be viewed as a medical problem. Doctors and nurses, rather than police, should handle it. There should be high-street clinics, staffed by medical personnel, where addicts can receive supplies to be consumed on the premises. Subject to medical examination and counselling, they should receive a free supply to use within the building. The medical examination required as a condition of supply would enable monitoring of their health, and counselling could help dependent users to better control the adverse physical effects of drug use.

Such a policy would eliminate the crime associated with hard drugs such as heroin. Users who currently fund their habit by criminal behaviour would not need to, since the supply would be free, costing the state very little.

This would work for some narcotics, but not recreational drugs. Addicts might take their fix of heroin in a clinic, but not social users of recreational drugs. Few people would want to enter a high-street clinic to take an ecstasy tablet – this is something used in clubs. Similarly, few people would want to snort a line of cocaine in clinical and antiseptic conditions. Neither would people want to smoke cannabis in a clinic. They would shun the medical conditions envisaged for supervised use. The cafes in the Netherlands in which cannabis use is tolerated are rather more social and relaxed than medical clinics.

The policy that could succeed would be to medicalise hard drugs, and to legalise the production and sale of recreational drugs such as ecstasy, cocaine and cannabis. They would no more be without controls than alcohol and tobacco are without controls, but no longer criminal.

The street price would collapse without the need for illegal supply. Quality could be controlled and subject to regulation and labelling. Advice could be given on packages warning of associated dangers, and alerting users to the early signs of adverse health effects.

Would their use increase? Many people choose not to smoke, even though they could. They rate the costs and health hazards of smoking higher than any pleasure it brings, and most people are moderate drinkers, even though binge drinking is legal. The same could be true of drugs.

Drugs are currently out of control and widely available. Without illegality, the criminal culture they sustain would disappear, creating a far preferable situation.

Published on guardian.co.uk here.

Forget Tobin taxes – we need more competition in the banking sector

4 September 2009

As G20 finance ministers meet in London to discuss the economy, a new briefing paper from leading think-tank the Adam Smith Institute has attacked Financial Services Authority chairman Lord Turner for suggesting of a new tax on financial institutions, calling his plan "misguided", "unfounded" and "incoherent".

Miles Saltiel, author of the paper and the Institute's senior fellow in finance, accused Turner of playing politics, and said he was attempting to harness anti-City populism to shore up his position, as well as that of the FSA – which the Tories now say they will abolish.

The paper takes apart Turner's case for the so-called 'Tobin tax', arguing that there is no objective way of knowing whether the UK financial services sector has become disproportionately large. Since it operates internationally, comparisons with UK GDP are irrelevant. On a practical level, moreover, Turner's scheme is a no-go: such a tax could not be implemented domestically without driving business overseas, and reaching any international agreement would take a generation.

However, Saltiel's most damning criticism of the 'Tobin tax' is that it is a lazy alternative to undertaking the reforms the financial sector really needs. By guaranteeing them a bigger slice of the profits, it would encourage politicians to accept the too-big-to-fail, near-monopolies that have emerged in the banking sector over the last economic cycle. "This is nothing less than a corporatist Faustian pact", Saltiel added.

Tom Clougherty, the executive director of the Institute, said: "Turner is advocating precisely the wrong approach. What we need are smaller banks and more competition in the banking sector. That would reduce systemic risk and help prevent future crises, but it would also be good news for consumers. The government ought to start by breaking up RBS and Lloyds TSB - HBOS, before returning them to the private sector."

A PDF of Regulatory Corporatism: Lord Turner and the Tobin Tax can be downloaded here.

Slug path

forget-tobin-taxes-we-need-more-competition-in-the-banking-sector

Joomla-id

4075