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Colombia: when will ‘our side’ learn?

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).

5 comments to Colombia: when will ‘our side’ learn?

  • Er, if he wants to cut taxes and help the poor wouldn’t the middle (and still libertarian) ground here be to cut the bottom rate of income tax?

    Is he *shock* trying to please as many vested interests as possible, rather than enact useful policy?

  • Paul Marks

    The lowest rate of income tax is zero – not a snide comment by me, the very poor simply do not pay income tax.

    As for cutting income tax rates for people on modest incomes – good do it, but this will cut revenue (and mean that government spending will have to be cut – or borrowing will go through the roof).

    When people say “if you cut income tax rates, revenue does not go down nearly as much as many people think it will – indeed tax revenue sometimes actually goes up” they mean cutting high rates of income tax (although what a “high rate” means is a moot point – historically anything over a tithe was considered high).

    Only “the rich” tend to be liable for high rates of income tax (which, in the West, since World War One has tended to mean 25% and over – although there have been some utterly absurd rates in some countries at some times).

    Of course (as every libertarian knows) there is no difference in the long term interests of “the rich” or “the poor” anyway.

    In the long term all parts of civil society benefit from smaller government and the nonviolation of the bodies and good of people.

    Not “trickle down”, not even quite when the sea rises all the boats rise to (as John F. Kennedy put it) – more that if government gets out of the way and stops robbing and ordering folk about, voluntary cooperation (civil society) enables people to improve their position.

    Of course this depends on other groups apart from the government not violating the nonaggression principle.

    Sadly in Colombia (and not just in Colombia) there are many individuals and groups that love violating the nonaggression principle.

  • steve ottridge

    Canada has its GST at 6% on almost everything except basic food. however it is complicated enormously by saying for example that salted peanuts are a snack and must be taxed but unsalted peanuts are a basic food so no tax, buy 6 doughnuts, that is basic food for a family so tax free, buy one for yourself it’s taxed.
    Canada also has a rebate program for the GST for poor families, however they must file an income tax return to get the GST rebate.

  • You appear to be saying that one tax should never be replaced by another. Why not?

  • Paul Marks

    I am interested in reducing taxes – not rearranging the deck chairs on the Titanic.

    And (of course) increasing taxes on the poor (forget the admistrative nonsense of “claiming it back”) is politically a very bad move – it plays into the hands of the F.A.R.C. and others.

    I remember the 1979 situation in Britian.

    We (the Conservative party) went into that election saying that we had no interest in increasing taxes on the poor – the charge was absurd, we were going to be a tax cutting government.

    Then we increased sales tax (“V.A.T.”) from 8% to 15%.

    Sure we won other general elections (because the Labour party went insane), but we were never really TRUSTED by certain people again.

    Much later it turned out that the finance minister (“Chancellor of the Exchequer”) was an agent of the European Union (then called the E.E.C.) – and he had never really been interested in increasing sales tax as a way of “financing” income tax cuts, his real intention was to bring British sales tax “into line” with other E.E.C. countries.

    Mrs Thatcher had a habit of appointing people who had voted AGAINST her in the 1975 leadership election to key positions (very few of the Conservative members of Parlaiment who had voted for her ever got a senior position).

    This was supposed to weaken their opposition (and perhaps it did), but it also had downside.

    For example, the vast increase in government spending after 1979 (basically all the spending promises, on pay and other such, of the outgoing Labour party government were treated as Conservative party government policy) which greatly undermined the ecomomy (the slump of 1979-1982 was much worse in Britian than in many other nations).

    Also there was virtually no effort to limit union power in the first years under Mrs Thatcher (because the Employment minister believed that unions should be allowed to organize contract breaking, obstruction, and other such whilst being immune from civil action).

    So wages (in spite of a massive fall of output) did not fall from 1979 to 1983 – which meant unemployment exploded.

    It was only much later that real labour market reform was pushed through (by Employment Secretary Norman Tebbit – who took over from the leftists who Mrs Thatcher had first appointed) – years too late for millions of people who had been left on the scrap heap.

    Norman T. did not weap phony tears about the “poor unemployed” (as James Prior and other leftist “Conservatives” had) in fact he simply said that in the 1930′s he had an unemployed father who had “got on his bike and looked for work, and did not stop till he found it”.

    However, Norman T. actually cared about the unemployed (i.e. he freed up the labour market so there were actually jobs to find) – whereas the rich leftist “Conservatives” did not really give a toss (at least they did not care enough to get in a fight with the unions).

    Of course in 1990 the coup came when Howe (finance minister in 1979 and Foreign Secretary in 1990) and other agents of the E.U. moved against Mrs Thatcher.

    If the lady had not put so many scum bags in senior positions they would not have had the power to move against her.