The great tax swindle
Sir: While sympathising with Mr George Gale (11 April) I feel obliged to contest cer- tain points which he made in that article.
The taxes which Mr Gale complained of, on cigarettes, alcohol, motor vehicles and petrol are all high because the inelastic de- mand for these products ensures a very high revenue. I cannot see how Mr Gale could make up the loss of tax revenue if he did cut the levies on the products mentioned, except by imposing a higher level of purchase tax on all goods. Indeed, if we were to follow Mr Gale's argument to its logical conclusion, we must abandon value judgment in taxation and put one single rate of purchase tax on all goods. I for one would not be willing to ac- cept this, and I would also argue that any move in that general direction, even without going to the extremes that are implied by Mr Gale, could only lead to a higher cost of col- lection, and hence higher taxes.
Nor can I accept the proposition that smokers, drinkers and /or motorists comprise some sort of cruelly exploited race apart from the general taxpayer, somehow chained to their habits, and lashed by the whip of over-taxation. He seems to forget that all those who smoke or drink or drive derive an amount of welfare from doing so at least equal to the price paid (including tax) otherwise they would not continue buying the products.
However, the proposition that this form of taxation 'might be defensible if the smokers and drinkers .. were somehow getting more out of the kitty than the rest' is nothing short of ridiculous. The anomaly in the argument is self-evident.
One could go on to mention the social discomfort and hence cost caused by. say, pollution from cigarette smoke or exhaust fumes thus justifying a higher rate of tax, but I will confine myself to one last point. Mr Gale seems to recommend, in a vague sort of way, an expenditure tax. How he en- visages it in practice is not made clear. and clearly he does not realise the difficulties inherent in such a scheme. Suffice it to say, however, that any such scheme to replace the tax structure as it stands today, would be very expensive to operate, if it were at all feasible.
While sympathising with Mr Gale, I doubt he must continue to be 'swindled'.
R. W. Taylor 3 Marine Terrace, Aberdeen
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