Adam Creighton

Darling’s regressive tax increases

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With the tax hike on alcohol and cigarettes, Labour, supposedly the party of working people, is effectively increasing taxes on the poor as a much larger proportion of poorer people’s incomes are spent on alcohol and cigarettes. Every economist knows that these kinds of tax increases are regressive.

 

The public health argument for these tax rises is dubious in the extreme. Alcohol and cigarettes are already prohibitively taxed and price increases like today’s are unlikely to deter anyone who enjoys a regular smoke or a pint. Rather, the tax will result in a direct transfer of wealth from drinkers’ pockets to government coffers.

 

Smoking and drinking can produce unfortunate social results. Yet public opprobrium, general economic growth and good manners are far more effective mechanisms for dissuading individuals from excessive consumption than increasing taxes. Today’s measures are just a mean-spirited excuse to raise money for an insatiable state, while attempting to appear all socially-aware--and all at the expense of people with little economic influence.