The Laffer Curve in action

CLAPTON

whilst the general shape of the laffer curve is very logical, there is little evidence about it's actual dimensions.

the_flying_pig

CLAPTON wrote: »

whilst the general shape of the laffer curve is very logical, there is little evidence about it's actual dimensions.

i think there have been a few studies. they usually suggest that it's possible to ramp taxes up very far indeed without reducing revenues.

there are a few exceptions. i think that something like 80% of the price of a pack of fags is tax... so if the ratio of tax to other stuff is 8 to 2, that's 4 to 1, so it's basically a 400% tax. i daresay that more money might be raised by cutting that one. but a key objective of that tax is to discourage consumption as much as raise money.

gadgetmind

Someone also did a study looking at what percentage of fag pockets dumped at football grounds were untaxed illegal imports, and it was the vast majority.

CLAPTON

gadgetmind wrote: »

Someone also did a study looking at what percentage of fag pockets dumped at football grounds were untaxed illegal imports, and it was the vast majority.

given we can all go to europe and legally import any quantity for persoanl use, how did they know they were 'illegal'?

the_flying_pig

CLAPTON wrote: »

given we can all go to europe and legally import any quantity for persoanl use, how did they know they were 'illegal'?

well, with the EU a bit more joined-up than it used to be, & with similar tobacco duties in a lot of countries, i believe that the old-fashioned 'booze [fag] cruise' to france would no longer really cost in for cigarettes. this is my impression based on, er, reading the papers & stuff i suppose rather than personal experience. i therefore believe that a lot of the 'black market' fags that we get here nowadays are counterfeit and/or originate from places like russia & china. either may be relatively easy to spot?

CLAPTON

the_flying_pig wrote: »

well, with the EU a bit more joined-up than it used to be, & with similar tobacco duties in a lot of countries, i believe that the old-fashioned 'booze [fag] cruise' to france would no longer really cost in for cigarettes. this is my impression based on, er, reading the papers & stuff i suppose rather than personal experience. i therefore believe that a lot of the 'black market' fags that we get here nowadays are counterfeit and/or originate from places like russia & china. either may be relatively easy to spot?

I don't seem to be able to paste the figures but prices for europe are here

http://www.the-tma.org.uk/tma-publications-research/facts-figures/eu-cigarette-prices/

the_flying_pig

CLAPTON wrote: »

I don't seem to be able to paste the figures but prices for europe are here

http://www.the-tma.org.uk/tma-publications-research/facts-figures/eu-cigarette-prices/

Ok, so I was at least partly wrong. France is nearly the same price now, but Spain about half price, some of 'new Europe' maybe a third of the price. I do know, though, that there are a lot of knock-offs from further east doing the rounds.

ManAtHome

gadgetmind wrote: »

Someone also did a study looking at what percentage of fag pockets dumped at football grounds were untaxed illegal imports, and it was the vast majority.

Found it (DM...) http://www.dailymail.co.uk/news/article-24751/Bootleggers-large-share-cigarette-market.html

Easy enough to determine proportion not UK taxed, but only a quote from the industry (TMA) claimed that the vast majority were smuggled (illegal) - dunno if they have any evidence for this.

gadgetmind

CLAPTON wrote: »

given we can all go to europe and legally import any quantity for persoanl use, how did they know they were 'illegal'?

1) Try importing a whole load and see what happens. Just don't do it in a car or van that you care about. 2) Yes, some of them might have been legally imported, but I'd guess now many, and ALL would have been untaxed. Of course, HMG aren't totally stupid, and they know about the Laffer curve. When they introduce taxes that will reduce the tax take and cause long-term damage to the economy their do it for political reasons and/or because they fancy their hand at social engineering. Dolts.

Generali

the_flying_pig wrote: »

i think there have been a few studies. they usually suggest that it's possible to ramp taxes up very far indeed without reducing revenues.

Not on income it isn't and the Laffer curve is specifically about taxes on income.

When Nigel Lawson reduced the top marginal income tax rate from 60% to 40% the tax take went up.