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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

Conservative tax policy

Written by Tom Clougherty | Tuesday 17 June 2008

When I'm moaning about tax, people often say, "Well, would it be any better under the Conservatives?" My normal response is, "Yes, but probably not by much – at least initially." That's not exactly a precise answer, so I thought it would be worth having a closer look and working out just what the Tories' tax policies are.

The general point is that they are not promising any up-front tax cuts that aren't balanced by corresponding rises elsewhere. There seem to be two reasons for this: firstly, they don't want Labour to be able to say they're going to 'cut services'; secondly, they're worried that by the time they get into power, the country's finances will be in such a bad state that any promises made now could turn out to be undeliverable. 

However, the Conservatives are committed to sharing the increased tax proceeds of economic growth between higher spending on services and lower taxes. That's a bit mealy-mouthed, but over the course of a parliament or two, such a policy could significantly reduce the tax burden as a percentage of GDP.

There are some specific commitments. The inheritance tax threshold would be raised to £1m. Stamp duty on homes under £250K would be abolished for first-time buyers. Stamp duty on shares would be abolished. The main corporation tax rate would be reduced to 25%, and the small business rate would be kept at 20% instead of rising to 22%. The couples' penalty* in the tax credit system would be eliminated by raising the working tax credit for couples with children. There would also be a tax cut for families, probably in the form of a transferable tax allowance for married couples with a child aged five or under. [Click 'read more' to continue]

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Eroded liberties 2

Written by Dr Madsen Pirie | Tuesday 17 June 2008

A cornerstone of British justice was that once you were acquitted of a crime, you were in the clear. No-one could be put in double jeopardy for the same offence. This has now been changed to allow a retrial if "compelling evidence" emerges. The thinking is to catch people who "escape justice" the first time if scientific advance or new testimony emerges to make a conviction more likely.

This is a mistake. There was a good reason for the double jeopardy principle. It prevented the law playing cat and mouse with people, trying them again and again in the hope of securing a guilty verdict, maybe with a tougher judge or a different jury. The fact that they only had one shot at it encouraged the state to be rigorous in its preparation. With multiple attempts they can afford to be sloppier in their approach. More to the point, if a person could not be found guilty the first time "beyond any reasonable doubt," they were clear to continue with their lives without fear of state harassment. The abolition of double jeopardy means that this is no longer true.

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Paying for the internet

Written by Carly Zubrzycki | Tuesday 17 June 2008

One of the many surprises that greeted me upon my arrival to London a few weeks ago was discovering the restrictions on internet usage that I would be subjected to by my provider. In the States, almost all internet service plans come with unlimited usage; here, for a low cost I have access to a few hours a day and enough space for about 500 emails each week.  If I want to download movies or many pictures, I can purchase space for an additional price. I was impressed by the efficiency and cost-effectiveness of plans that charge according to use, and wondered why the American market seemed so different.

Now, it looks as though American internet suppliers will be moving in the same direction. It’s hard to imagine the internet as a limited resource, but only so much information can be transmitted at any given time on one network. As demand has increased, the supply has become more valuable. Companies like Comcast and AT&T are now introducing plans that include monthly caps or slower service for those who use too much bandwidth at peak hours. Initially, I am sure that there will be some resistance.  People do not tend to like changes that seem to restrict their activities, especially when they are used to unlimited access.

Nonetheless, the vast majority of Americans should be happy about this innovation. Under the existing system, if a few heavy users increase bandwidth demand enough to drive up prices or force companies to create more infrastructure, everyone except those few users is worse off. Either prices must be raised to support new infrastructure with higher capacity or service will be slowed because of too much information. By charging people according to their usage, Americans can decide for themselves how much internet access they want to pay for. The relevant trade-off is not between unlimited and restricted access at the current prices; rather, it is between higher rates and slower service for everyone, or a choice among packages that lets us pay more only if we want extra access. The result will be a fairer distribution of the costs and benefits of the internet, with those who use it most paying their fair share.

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Quote of the day

Written by Wordsmith | Tuesday 17 June 2008

Twenty years ago you would also have been regarded as barmy if you had said innocent people would have their DNA held on a database for criminals; or that there would be one CCTV camera for every 14 people; or that children would be fingerprinted and their records held, as though they were all potential victims of abuse; or that it would be unlawful to stage a silent, one-person protest within one kilometre of the Palace of Westminster without permission from the police; or that trials would be held without juries; or that microchips would be placed in our dustbins; or that there would be 266 separate provisions granting power to enter homes without permission, a symptom of the expanding role of the state in the lives of citizens.

Philip Johnson in the Daily Telegraph

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Blog Review 630

Written by Netsmith | Monday 16 June 2008

The basic problem with pay as you go pension schemes (whether Social Security or National Insurance) is that they operate in the same manner as Ponzi schemes.

It's really rather difficult to describe as illiberal something which the great liberals of the past have actually defended. It mjihgt or might not be wrong, but illiberal it isn't.

If you'd like to know why there's a shortage of maths teachers there's some clues here.

Passport to Pimlico, confirming your faith in human nature or aiding and abetting? Possibly all three?

Testing the Coasean concepts of transaction costs. Why, reflecting different production costs, do some things change in price while others remain static in price but change in quantity?

The joys of this intertubes thing. How people respond to what they see as a silly newspaper column.

And finally, yes, sadly, politics can be like this.

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Eroded Liberties 1

Written by Dr Madsen Pirie | Monday 16 June 2008

The liberties which preserve between them the rule of law and the rights of individuals have been systematically eroded by recent governments. This government has been the most recent to attack them, and has also been the most determined. It has cited what seem plausible reasons for each action, but the cumulative effect has been to subvert the rules which protect us.

The ASI will point to the fundamental principles which have been abandoned or critically weakened. David Davis was correct to highlight this insidious trend, and courageous to make a stand against it. The Westminster journalists who try to trivialize this diminish themselves by doing so.

The first of these eroded liberties we identify is the presumption of innocence. It has been weakened to catch serious fraud cases. Now individuals may be required to prove that they made their money legitimately, rather than having the state required to prove they broke the law. We should not have to justify our actions to the state unless and until it does that. The erosion of this right crucially alters the burden of proof which should be required to threaten a person’s liberty. The rule which should be restored is that a person is innocent until found guilty.

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Written by Dr Eamonn Butler | Monday 16 June 2008

A million people in the UK have petitioned Downing Street against polyclinics – the 'super-surgeries' that will absorb or replace many existing family doctor practices – the so-called general practitioners or GPs.That's almost as many who petitioned against road congestion charging. Given that they are both so unpopular, can we conclude that these ideas are both pretty daft?

Well, road charging is a sensible idea. It allows you to charge on the basis of use, and on the basis of the costs that road users cause to others when they all decide to come into town at the busiest times. People reject it because they know politicians too well: they fear it will be an extra charge, not one which replaces existing motoring taxes.

Polyclinics aren't a bad idea either. There's strong evidence that indiividual GP surgeries have poorer medical outcomes than group practices, where doctors can share administrative and nursing backup, can share patient loads, and can specialize to a certain extent. Making them even bigger, allowing diagnostics and even some surgical procedures to be done at the same site – saving patients from going back and forth to hospital – seems an obvious extension of this.

But now patients are saying they rather like their local GPs. They like to see the same doctor every time. They like the fact that their doctor is near to where they live. And NHS experts too worry that they are just going to duplicate what hospitals already do.

Again, it's the fact that the existing setup is state-run. That means there is no market information to tell the provider (the government) what people actually want. I suspect that in a market healthcare system, people would rather like small-scale medical services near where they live. Or maybe better, something near their work that was open on their way in and out, and at lunchtime. And probably they would like smaller (dare one say 'cottage') hospitals or clinics near where they live, in preference to the huge district hospitals that 1970s state giantism gave us. And they'd like more downline tests, consultations and monitoring, rather than having to turn up in person all the time.

But that's only a guess. Without the preference information that we get from having a market, we can't know. Which means that whatever the government does, it's bound to get wrong, and upset a lot of people in the process.

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That free lunch thing

Written by Tim Worstall | Monday 16 June 2008

As I've mentioned here before those elusive free lunch things really do exist. Liam Halligan tells us that the high oil price is being driven by the fundamentals:

In 2007, the review shows, global oil demand was 85.2m barrels a day, up from 84.2m the year before. Global production, meanwhile, fell from 81.7m barrels daily, to 81.5m. So, global oil use is accelerating just as production is coming down.

Such price-boosting trends will almost certainly continue. On the consumption side - as is well-know - the relentless demands of China, India, Indonesia and the other "emerging giants" are unlikely to abate soon. As these countries continue getting richer, their rapid population growth and escalating fuel use per head will keep global oil demand spiralling upward.

Well, yes, as far as Liam goes, that's true. However, there is one thing more we might want to add:

The International Energy Agency has estimated that oil subsidies in China, India and the Middle East totaled about $55 billion in 2007.

So we actually have a global situation whereby we rich countries are busily whacking taxes onto oil in order to reduce demand for climate change reasons and poor countries are at the same time gleefully subsidising the use of the same product. Plus, of course, those subsidies also drive up demand for that subsidised resource, thus raising the global price still further.

So there is our elusive free lunch: whether we want to talk about it in terms of the global price of oil, or for climate change reasons we'd prefer to concentrate on emissions, we could actually improve both matters simply by getting those poor countries to stop subsidising their consumers.

As I mentioned before, there are indeed free lunches out there, almost always when we manage to stop governments doing some damn foolish thing they've taken it upon themselves to do.

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Quote of the day

Written by Wordsmith | Monday 16 June 2008

Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others.

Ayn Rand

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Blog Review 629

Written by Netsmith | Sunday 15 June 2008

An interesting thought: changes in petrol prices will change the relative values of land: the further from the centre of a city, the less expensive it will become, other things being equal. This might then change, say, US cities, make them more European perhaps?

That Irish Referendum was the so called "Plan D". The next step will probably be the plan with no name, for none will admit to it.

This is certainly true: while it might be some of the same people who worry about, say, the EU and civil liberties, that doesn't mean that a campaign about civil liberties has to have anything to do with the EU.

There really is something rather odd about the American newspaper industry. Very odd indeed.

So who is it that makes those windfall profits which should thus be subject to windfall taxes?

Do the Greens really want to drive us back to this lifestyle?

And finally, good news for first husbands, perhaps not for first wives.

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