Thursday, March 03, 2005

Telly tax here to stay

The government has announced that the £3 billion telly tax will remain in place for at least the next ten years.

Big surprise.

It’s now so egregious that you sort of wonder if perhaps somehow we’ve missed the point and got the whole thing completely wrong. Even a sound free market man like Blimpish has been racking his brains to see if there could perhaps be some reason- any reason- why the BBC should remain tax funded. Alas, he couldn’t find one.

But try this: despite the tax, telly ownership is virtually 100 per cent, showing that we’re consuming broadly the same amount of telly with the tax as we would have done without it. In other words, the demand elasticity for Richard and Judy etc is very low. This is good because it means that the tax is not distorting our consumption pattern by inducing us to dump the telly and…I don’t know, read Dickens, say. That kind of tax driven response would produce what textbooks call a deadweight welfare loss.

So telly tax is a good tax. Unlike most of our other taxes, it raises revenue without incurring a welfare loss.

In fact, thinking about it now, why don’t we flog off the BBC, unhypothecate the telly tax, substantially increase it, and use the revenue to eliminate those tiresome distortionary taxes like income tax and wine duty.

I’d certainly drink to that.

No comments:

Post a Comment