1776 Canons of Taxation

1776 was a remarkable year for freedom. Arguably, the greatest single cause of this was taxation and, not least, Adam Smith’s publication on the wealth of nations.

What makes a good tax?

The ‘Canons of taxation’ were first developed by Adam Smith as a set of criteria by which to judge taxes. They are still widely accepted as providing a good basis by which to judge taxes. Smith’s four canons were:

Equity - A tax should be perceived by the taxpayer as being a fair tax;

Certainty - A tax should have a clear purpose and not have an arbitrary effect on taxpayers;

Convenience - A tax can be easily collected

Efficiency - The costs of collection are small as a proportion of the revenue raised and it does not distort the economic behaviour of the taxpayers, individuals or businesses.

Modern economists have added three more canons to these to update and extend them:

A tax must not hinder efficiency or should involve the least loss of efficiency
A tax should be compatible with foreign tax systems (in the UK’s case, with Europe’s)
Tax should automatically adjust to changes in the rate of inflation (particularly important in high inflation economies)
The best taxes will tie in with all these. The worst taxes won’t!

Perhaps, certain finance ministers ought to get back to basics, particularly when scrapping the 10% rate?

Economists - Adam Smith (1723-90)

Adam Smith is often seen as the founding father of economics. He developed much of the theory about markets that we regard as standard theory now. In fact he could be seen as being to blame for much of the content of current economics courses!

Adam Smith was Scottish and after graduating from Glasgow (at the amazing age of 17!!) he was a fellow at Oxford and then he lectured back in Scotland again - first at Edinburgh and then Glasgow Universities. Surprisingly this was not in economics. In fact it was not until 10 years after leaving the Chair of Moral Philosophy at Glasgow that he wrote the book (or series of books) for which he is most famous. After Glasgow, he decided to go travelling. Almost certainly this was not backpacking and sleeping out in stations as he spent much of this time meeting the influential thinkers of the day. It was this that helped him to formulate his ideas, and once he got back to Scotland again, he started writing.

http://www.adamsmith.org/smith/won-index.htm

Smith should have added three more qualifications for a good tax:

  • It is used intelligently.

  • It is applied to a worthwhile purpose.

  • It is not used for party political advantage.

If governments did that, our taxes would drop significantly.

If governments did that, I would have a coronary in amazement. And be admitted to a public hospital underfunded by my taxes while my government uses my taxes to support all manner of bullshit which should be supported by the few fruitcakes who like it instead of the whole community of taxpayers.

I mean bullshit like this, selected from the vast array of taxpayer funded bullshit in all sorts of areas.

The art of waste
August 24, 2005

Their work isn’t popular enough to earn them a living, so our artists grasp the taxpayer teat. It’s not how we should be spending our money.

WHEN the Bracks Government spends $96,000 to paint trees blue, you see again why politicians and bureaucrats shouldn’t be handing your money to artists. This is what you get when someone takes your taxes to buy art no one likes enough to buy themselves.

Just ask yourself – when you heard 40 elms at Yarra Park would be painted the colour of sad, didn’t you instantly guess government money was involved? Who else would spend so much on something so unwanted?

But let’s not miss the wood for the blue trees. The real worry isn’t discoloured elms, but distracted artists – artists who are paid by governments to ignore their true audience, the public.

It’s bizarre. In fact, our biggest arts grants are now going to middle-aged or elderly artists who – even after decades of “success” – still seem not to have found an audience big enough to pay them a living.

This month the arts and craft board of the Australia Council announced another round of grants worth more than $2 million.

The biggest handouts were four fellowships each worth $80,000, given to arty-crafty people of “outstanding achievement . . . to create new work and further develop their practice”.

The winners all had decades of work behind them – Klaus Moje (born in 1936), Jenny Watson (1951), Fiona Hall (1953) and Joyce Hinterding (1958). All had also had huge success, or as huge as it gets in art-crafts. Between them, they’d won countless awards, folders of fawning reviews and earlier grants and fellowships.

The arts establishment had also variously given them jobs as lecturers, stints as artists-in-residence and hanging space in scores of public galleries, here and overseas.

Yet despite all that, they still need our money – not freely given, but extracted through taxation – to keep making what they make.

Given that Moje, a glass-worker, is now 69, can we ever expect an artist to stand on his own two feet – or try another line of work?

As I said, these are artists much praised, but when you look at what they do, you might understand why they still need a grant.

[b]The Australia Council says Hinterding, for instance, will use her $80,000 to “create, exhibit and perform with a series of printed graphic antennae”.

The advertising for her works describes them best: “(They are) based on celestial site recordings of magnetic fields and weather satellites made with custom-built antennae . . . The result is a complex universe of mysterious interference, ghostly transmissions from unfathomable places, disembodied static, and failed communication.” [/b]

It sounds kind of interesting for 30 seconds, but must taxpayers be forced to give Hinterding $80,000 to keep producing examples of this failed communication?

Would they even care if her antennae never again tuned in to mysterious interference? Perhaps not, because if they did, they’d support Hinterding in sales, not grants.

[b]I should add that I don’t dislike her art, or that of the others. I even like the way Fiona Hall carves flowers from sardine tins, knits baby clothes from Coca-Cola cans and builds bird nests out of shredded US dollar bills. I just doubt many people would buy it, which may be why she applied for this fellowship.

But why must we be forced to pay for art that we do not choose to buy?

Why must we pay all the other art and crafts people who got smaller grants to create “a new body of work in transparent rubber”, or “photomedia works based on Prato in Tuscany” (Tuscany again!) or “a series of lighting pieces conceptually based on characteristics of a dysfunctional family”?

Why pay for all this?

Writer Rodney Hall, former head of the Australia Council, tried to justify it in a paper written last month for the federal Labor Party.

“The arts make us feel better,” he declared. Like aspirin, I guess. Or beer. [/b]

If that’s so, I’m surprised so few artists seem all that happy. In fact, Hall seems especially unhappy, especially when contemplating the arts that are meant to make him “feel better”.

[b]In his paper, he groans that our books have got worse, and so have our films.

Indeed: “It is glaringly obvious that international distributors are not at all interested in Australia (sic) products because they are Australian.” And at a recent Opera Australia performance he was horrified to find singers could “not even sing the notes”.

All this has happened as our governments spend more than ever on artists. Yet Rodney Hall, and our politicians, just don’t see the link – that as the state spends more, our arts tend to get worse (or so Mr Hall says). [/b]

Hall instead clings to the conceit that popular art is trash art – the poisonous conceit that explains why we keep funding the unpopular stuff instead.

“Especially if it has power and lasting value, it is seldom immediately assimilable and therefore seldom immediately popular,” he claims. Well, you might want to believe this too, if you wrote books as ignored as the grant-fed Hall’s.

The truth is, of course, great artists must rarely wait to become popular. Beethoven, Dickens, Hemingway, Picasso, T.S. Eliot, Walt Whitman, Verdi – all were celebrities in their day, and didn’t need the state’s help to create.

It’s state money, direct to artists, that corrupts them, in part by helping them to forget it takes two for art to succeed – someone to create and someone to enjoy.

Take the audience out of that marriage, and art withers, flowers fade and – heavens! – even the very trees turn blue.
http://www.news.com.au/heraldsun/story/0,21985,16361389-25717,00.html

And the opening sentence in that article from a mildly fascist journalist hostile to the Bracks government shows just how successful politicians have been in abusing taxes for party political purposes. Bracks was the Premier of the State of Victoria, where I and the journo live. The government Bracks headed was the Victorian Government, just like the Australian Government wasn’t the Howard Government we had rammed down our throats at taxpayer expense for years, and now the Rudd Government which apparently is the Australian Government. More taxpayer funded bullshit!

That wont do, next thing you’ll be recommending tax hypothocation, which finance ministers tend to squeal at. :slight_smile:

I doubt it.

Mostly because I have absolutely no idea what it is, but maybe I could suggest it by accident. :smiley:

Specific taxes for secified use. e.g. Road Tax for road improvements; 1% increase in income tax for education…that sort of thing.

Of course they get upset about it. Anything like that suggests that the money in the economy might not belong to them, to be used as they see fit. That’s a concept no chancellor likes!

Ah!

We’ve had one or two of those here.

There is no sign they were used for the specified purpose, or any purpose.:wink:

I can see why governments wouldn’t want to be held accountable on such taxes.

Spot on, both of you.

Also, for those that may not be au fait with the subject, hypothocated tax might not be particularly palatable with the taxpayer. For example, how many would be pleased about, say, one percent of their taxes going into the upkeep of prisons, a place where it is perceived, by some, as a cushy-number for murdering paedophiles?

The UK government raises in the region of 230 to 250 billion ( a UK billion is equal to one thousand million) pounds in taxation each year.

Of this:

30% is through income tax;

23% is from VAT (Value Added Tax - a consumer tax)

21% National Insurance COntributions (NIC)

The remaining 26% is made up of duties (16% - alcohol, tobaco etc. another consumer tax), corporation tax (8%) and the remainder being capital taxes.

Naturally, nobody likes paying taxes, and particularly when they are considered to be mis-handled.

There is much discussion regarding the best or fairest form of taxation. One of the suggestions being banded about, in the UK, is a broadening and increasing of comsumer taxes and a massive reduction in income tax.
That way, it is argued, they who consume the goods and services will be paying tax on what they can afford to spend.

I suppose that there is no perfect system, and whichever system which might be used, it still doesn’t guarantee that the finance secretaries have a clue of what it is that they are doing.

However, one thing that really irks me, is paying an energy bill which includes environmental tax within the net total, and then having to pay VAT on the net total. Where’s the value added by the environmental tax - charging tax on a tax must surely have old Adam Smith pissing himself in his grave.

Who would have thought that the subject of taxation could be so fascinating? :rolleyes: :smiley: