By ‘our side’ I mean the people fighting the Marxist FARC in Colombia – particularly President Uribe. I not expect mainstream politicians to be libertarians (although it would be nice), but I do expect them to have some common sense.
President Uribe is highly intelligent man who has had considerable success in fighting the communists in Colombia. However, his latest idea (as reported in this week’s Economist print edition) shows a lack of common sense (a state of affairs all too common in politicians – including highly intelligent ones).
President Uribe wishes to cut the top rate of income tax – good for him. However, the President wishes to ‘balance’ this by extending sales tax to cover various basic foods. Have no fear, the poor would be able to claim back the money they pay in tax.
So a new tax will be introduced (a tax on food), and this will be ‘balanced’ by a new welfare benefit (for make no mistake, this is what this payment will be). A complicated bureaucratic mess. Sadly it is often the most intelligent of politicians who think up ideas like this.
If someone wants to cut the top rate of income tax (from 38% to 32% or whatever) then they should do so. But if they fear a ‘loss of revenue’ (and cutting the top rate of income tax always ‘costs’ less in revenue than many people predict) they should cut government spending (which they should do anyway).
They should not introduce a new tax, certainly not a tax that will be presented (by the communists, but not just by them) as a tax on the basic needs of the poor – trapping the poor into going ‘cap in hand’ for a new benefit (if they can deal with all the paper work).