In common with Milton Friedman, the ASI is skeptical about most taxes, especially proposed new ones. There is, however, one new tax the government might consider to plug the holes in its finances. It is a recreational narcotics tax.
It would involve first passing a law to remove their illegal status, but it would yield immense advantages. In the first instance it would undoubtedly raise billions of pounds in revenue. Last year the direct taxes on tobacco products, excise duty plus VAT, raised £12bn. This does not include the income tax paid by the industry's employees or the tax on the profits made by their sale. Undoubtedly a recreational narcotics tax would make a major contribution to the Treasury's coffers.
It would also enable quality controls to be put in place to greatly reduce the incidence of contaminated doses or overdoses. Labelling would protect users. It would cut crime massively, with some users no longer needing to engage in criminal activity to fund their use. Without their criminal status, there would be no turf wars between drug gangs, or the shootings and stabbings that characterize them. Government would save money on prisons, hospitals, and policing.
Even with the tax, legal narcotics would be cheaper than ones which today carry the costs of criminality. The many current users in conflict today with the police and the courts would be brought within the law and have no such cause for hostility.
The main losers would be the dealers and the criminal gangs which are part of today's supply chain. Examples from overseas show the positive results of such measures. By adopting such a tax, government could reduce the pressure on other taxpayers without incurring the wrath of those newly taxed, a group that would overwhelmingly back the measure. It might be time for it.