British “Fat Tax” Would Mean More Intrusive Government

According to a Reuters report, a new study from the United Kingdom estimates that more than 3,000 lives would be extended if the 17.5 percent value-added tax was imposed on supposedly unhealthy foods. Without endorsing the specific estimates, the underlying economic analysis is sound. Certain foods presumably are unhealthy (at least for people who already are overweight) and taxing those foods will change behavior (just like taxing work, saving, and investment changes behavior).

But this does not mean, as a matter of principle, that the government should use the tax code to dictate private choices. Once politicians wander down that path, what will stop them from taxing people at higher rates if they don’t jog at least three times a week? Or how about tax credits for eating green vegetables? Some might respond that taxpayers have a right to insist on healthy behavior since they are paying – via the government-run health care systems – the medical costs of unhealthy people. But this highlights the problem of a socialized health care system. If people are responsible for the consequences of their own choices, then there is less temptation for nanny-state policies. For what it’s worth, this does not mean that the U.K. should maintain a VAT exemption for food. But the exemption should be eliminated as part of a plan to reduce the general tax burden, not as a scheme to control people’s lives:

A “fat tax” on salty, sugary and fatty foods could save thousands of lives each year, according to a study published on Thursday. Researchers at Oxford University say that charging Value Added Tax (VAT) at 17.5 percent on foods deemed to be unhealthy would cut consumer demand and reduce the number of heart attacks and strokes. The purchase tax is already levied on a small number of products such as potato crisps, ice cream, confectionery and chocolate biscuits, but most food is exempt. The move could save an estimated 3,200 lives in Britain each year, according to the study in the Journal of Epidemiology and Community Health. …Any “fat tax” might be seen as an attack on personal freedom and would weigh more heavily on poorer families, the study warned. A food tax would raise average weekly household bills by 4.6 percent or 67 pence per person. Former Prime Minister Tony Blair has previously rejected the idea as an example of the “nanny state” that might push people away from healthy food.

Government Giveaways

Most Americans are appalled by pork spending, corporate welfare, and other congressional waste. But at least one man relishes federal giveaways. He extols the government freebee. The July 4 Falls Church (Virginia) News-Press notes:

“Mothers, lock up your daughters, because Matthew Lesko, the so-called ‘crazy Free Money Guy,’ will be camping out in front of the U.S. Capitol from August 14-17. Famous for his question-marked suit, Lesko will be answering questions during his campout as part of a program he calls: One Man, 72 Hours, 100,000 Government Freebies.”

So folks, don’t leave the taxpayer rip-offs to the expert Washington lobby firms such as Cassidy and Associates. If you are vacationing in D.C. this August, you can teach yourself how to drain the U.S. Treasury from the Free Money Guy.

(These days pilfering from federal taxpayers has been raised to a fine art form. Indeed, here’s Lesko immortalized in a D.C. art gallery.)

Takeover Accomplished!

Yesterday, Democrats made good on their promise to transform the U.S. House of Representatives from what they said had been a wholly-owned subsidiary of student lending companies under Republicans, into a wholly owned subsidiary of middle- and upper-middle-class freeloaders under them.

By a 273 to 149 vote, the House passed the College Cost Reduction Act of 2007. Its good side is that it would cut several subsidies to lenders in federal loan programs, supposedly saving about $19 billion. The bad part is how it would use those savings. If enacted, the bill would modestly increase Pell Grants – which is not good news if you dislike taxpayer-dollar giveaways, though at least Pell is somewhat geared toward the truly needy – but would focus most benefits on loan programs utilized much more by the financially able. (See table 5 of this report to see loan utilization by family income.)

Indeed, the bill would cut in half – to a tiny 3.4 percent in five years – interest rates on subsidized student loans, and offer $5,000 in loan forgiveness to public servants ranging from police all the way to – get this – prosecutors! That is, it would offer $5,000 until those people had been in their jobs for ten years, at which point the entire remainder of their loans would go bye-bye, eaten by taxpayers who themselves get, approximately, nothing out of this bill.

Needless to say, professional advocates for college kids with huge senses of entitlement – like these guys, these folks, and this gal – are ecstatic about this transfer from one group of thieves to another. As for me, I’m just sorry that it’s too late for poor, common-good-obsessed prosecutors like this guy to have his loans forgiven. Oh, and this famous public servant, too.

Food Safety and Imports

Unhealthy products from China have been in the news lately. First it was poisoned pet food, then contaminated toothpaste, toy trains with lead paint, and now farmed fish containing unauthorized chemicals. For skeptics of trade, the news offers yet another reason to beware of imports in general but especially those “Made in China.”

Consumers have every right to be concerned about the safety of the products they buy, but the problem of potentially harmful products is not unique to China or even imports. As a New York Times story points out today, U.S. customs officials routinely intercept more potentially harmful food imports from Mexico and India than they do from China. Federal inspectors have turned away hundreds of shipments of produce from the Dominican Republic and even candy from Denmark.

Safety concerns are not confined to imports. Americans have been poisoned by beef from Nebraska, spinach from California, and peanut butter from Georgia. The same safety standards apply to imported food as to domestic food. The right response is not wholesale restrictions on imports, but to find better ways of keeping harmful products out of stores no matter where the products originate.

The large majority of food products imported to the United States, like those grown domestically, are safe and healthy. In fact, imports improve our health by making fresh produce available year around. Imports also keep prices down at the grocery store, which benefits low-income families most of all. Raising tariffs on imported food would certainly do more harm than good.

A Cautious Cheer for French Tax Cut Package

President Sarkozy’s Finance Minister has unveiled a set of tax cuts. Some of the tax cuts, such as lower death taxes and reducing the income tax so that it never exceeds 50 percent, are well designed. But the pacakge also contains gimmicky proposals such as eliminating tax on overtime (one wonders whether every French worker will seek to work 80 hours one week and zero hours the following week, though the government will probably have a plethora of rules restricting the definition of overtime). The government also wants a tax preference for some mortgages, a silly policy that will probably undermine long-term growth by misallocating capital. While Sarkozy’s package leaves something to be desired, the fact that the French government is seeking to cut taxes rather than the other way around is worth applauding. But before popping champagne corks, the Tax-news.com story includes a worrisome mention that these tax cuts may be accompanied by offsetting tax hikes:

French Finance Minister Christine Lagarde has presented an EUR13.6 billion package of tax cuts to the national assembly… The measures, which will cost up to EUR11 billion in 2008 alone, include the removal of taxes on overtime, reducing taxes on inheritances, capping income tax at 50% and the introduction of tax deductibility on some mortgages. …The package places much emphasis on reducing taxes on the wealthy, a measure sure to spark debate that the government is putting the interests of the rich before looking after its more vulnerable citizens. Lagarde however, argued that such measures are vital if France is to be a place of wealth creation. “All you have to do is go to Gare du Nord on Friday night to Eurostar and Thalys arrivals to understand that these French bankers, who have gone to work in the City, those tax exiles in Belgium, want one thing, to come back to France,” she told lawmakers. …However, it remains unclear from the government’s plans whether some or all of the cost of the tax cuts will be recouped with tax increases or spending cuts elsewhere.

Hearing on the Drug Enforcement Agency

This morning there is a congressional hearing about the DEA’s campaign against pain doctors.  The drug war is a disaster in so many ways–but this aspect of the war is particularly cruel.  Siobhan Reynolds of the Pain Relief Network will give members of Congress an earful as to what the government is actually doing.

For Cato work on this DEA campaign, read this and this.

This Could Be the End of 007’s Aston Martin

Motivated primarily by climate change hysteria (with a bit of hate-the-rich envy probably in the mix as well), a British member of the European Parliament wants to ban cars that go more than 101 miles per hour. A Bloomberg columnist dismisses this silly notion and makes a more serious point about how limits on energy consumption are a threat to people in poor nations:

driving a sports car anywhere but on a racetrack might be relegated to history’s dustbin. Fast, powerful cars within a few years may be outlawed in Europe, an idea that has been raised ostensibly because Ferraris and Porsches produce too much carbon dioxide. … Chris Davies, a British member of the European Parliament, is proposing one of the most-extreme measures – a prohibition on any car that goes faster than 162 kilometers (101 miles) an hour, a speed that everything from the humble Honda Civic on up can exceed. … The folks against sports cars in Europe and big sport utility vehicles in the U.S. often are same ones who hate McMansion-sized homes, corporate jets, jumbo freezers, yachts, 60-inch flat-screens TVs, overnight-delivery services and other trappings of Western-style wealth and energy use. … Outside of a handful of command economies, few today would agree that a central authority ought to regulate who owns what. … Calls for limits on carbon dioxide ignore a basic point. People are likely to be better judges of the benefits of fast cars, TVs, air conditioners, and jets than government planners. Besides, the brunt of government limits on energy use may well fall on the world’s poorest nations, which need more energy – thus generating more carbon dioxide – to provide lighting, refrigeration, harvesting, water purification and transportation. What right do environmentalists in rich countries have to deny residents of poorer ones the benefits of higher living standards?

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