jeudi 25 août 2016

Taxation is not a solution to the vices of citizens

Tax an individual or a company, is to force him to pay an amount proportional to general income or assets. All political systems have recourse to taxation.
"I will give you seed, and you shall sow your fields, so you can collect grains. Ye shall give the fifth part to the king; and I give you the four others to sow the land and to feed your families and your children "(Genesis 47: 24), the Bible says.

If taxation is old, the use of taxes varies by political systems. In France, in 2014, those resources (44.7% of gross domestic product - GDP) are used to finance the sovereign functions of the state and the welfare state (31.9% of GDP).

Moreover, the notion of vice is closely linked to moral and refers to religious prohibitions. It was called vice in view of the evil temptation was requalified by science "addiction". Addiction to substances, such as nicotine, or practices such as gambling, or behaviors such as compulsive overeating.

Nicotine is a psycho-stimulant present in tobacco leaves whose effects are, as for the coca leaf, long known. From the industrial age, smoked tobacco consumption has grown, pyrolysis for taking more nicotine you inhale. Vice to addiction, the transition is not neutral. In the first, the individual is responsible for his choices in life; in addiction, the individual's responsibility can be reduced on the grounds that we are not equal before the addiction.

Prohibition encourages smuggling

The particular penchant for addictions or morally reprehensible behaviors are subject to a ban (prohibition) or taxation. History shows that the prohibition does not eliminate the vice. In France, cannabis is prohibited, but it is consumed by many French people, including teenagers. Like heroin, cocaine is banned, but consumption has never been removed, and if it has fallen, it is due to the appearance on the market of other synthetic drugs equally prohibited.

It is therefore surprising that some doctors call for ban of tobacco. This generous formal opinion, in addition to seriously interfere with individual freedom, in practice leads to worst. Prohibition encourages smuggling, poor quality of consumed products and other criminal activities. Moreover, it paradoxically increases consumption.

If the prohibition can not overcome human vices, it is often argued that taxation could. The intentions of the States here perfectly readable. Taxation appears to be a compromise between powerful interests and prevention of display. However, advocates of behavioral taxes respond with the argument of the level of taxation. If it is very high, they say, lower consumption. This is already a concession, since no one ventures to predict the disappearance of smoked tobacco ...

Nevertheless, these lawyers have serious arguments, especially the Australian experience. A continent isolated by the sea and Anglo-Saxon culture has managed to seriously curb consumption, increasing taxes to make it very expensive pack of cigarettes. But this is not the situation in France. So that in Europe, it is clear that taxes can not overcome vices.

Stop-gaps in social budgets

In economic theory, the additional taxation of addictive substances is a perfectly legitimate basis: the externalities. Tobacco use has effects that the market does not internalize in the price. Medicine known diseases induced by tobacco accurately. The cost of care due to complications tobacco is paid by others, as part of the pooling of Sécurité Sociale (Medicare/ Medicaid) or taxes.

These negative externalities are only partly offset by lower life expectancy which means that pensions are no longer paid. Grace completeness of care data and its accuracy, we can actually calculate the equation of externalities. Therefore  "Pigouvian" taxation (named after the British economist Arthur Cecil Pigou - 1877-1959) who described in his 1920 book, The Economics of Welfare (Macmillan) is rational. It combines individual freedom and economic consequences.

The door opened to the vice of State

But in this area, and assuming that the additional tobacco tax becomes Pigouvian (that is to say, calculated based on the cost of externalities), there is, in France, an exceptional situation. Tobacco taxation is indeed far from being in favor of treatment or prevention. It has served and still serves as stop-gaps in unfunded social budgets that invents State at the discretion of election often necessities. As it is to grant "rights" without having the necessary funding.

In 2000, the reform of social security contributions Financing Fund received favors from the state, however much evil to find the necessary funding. This fund is rated as 85.5% of the product of the "right of use" on tobacco. In 2012, no less than 11 recipients shared the 11.13 billion euros of this product, for fractions ranging from 53.52% for the National Fund for health insurance, 0.31% for the Fund of early retirement of asbestos workers.

If the tax is not a solution to citizen services, we see that it can be an open door to the vice of the state, which diverts money collected on the basis of well-intentioned motives for doing fiscal resources to finance its policies.

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