Oh well done Ritchie

The government admitted today that 50p tax rate payers alone did more than £6 billion of tax avoidance on one income tax ruse alone.

No, that\’s not what the government has done at all.

They have admitted that a change in the tax rates changed peoples\’ behaviour. Which really shouldn\’t be a surprise, a change in incentives will lead to a change in behaviour.

This is why we tax petrol for example, so that people will use less of it. And if people drive less as a result of a rise in fuel duty we do not in fact call this tax avoidance, we call it changing behaviour in the face of changed incentives.

This is true of booze taxes, fag duty, airline passenger duty: why anyone at all would think that it\’s different for income tax I\’m not sure.

There really is a Laffer Curve you know.

7 comments on “Oh well done Ritchie

  1. Tim, go to BBC iplayer for last night’s Moral Maze on the morality of taxation with our favourite idiot.
    Some great fun to be had, some lines of investigation (be interesting to speak to employees of the many businesses he has apparently set up) and a glaring gap in his answer when asked if he’d ever advised a client as to how to avoid tax.
    Also note the Dr strange love-esque note of hysteria which creeps in towards the end.

    Tim adds: Sadly, I can’t get iPlayer here in foreign…..

  2. Tim, there must be plenty of proxy services to get around your location problem.

    A quick google for “iplayer expat” shows up some interesting suggestions.

    Tim adds: Entirely possible but I wouldn’t understand how to use anything like that.

  3. Tim, as Moral Maze is a radio programme, the BBC doesn’t block non-UK areas from using iPlayer to listen.

    I live in foreign too and I can get it.

  4. Evidently RM’s knowledge of economics doesn’t extend as far as Pigouvian taxation…..

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