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Archive for November 4th, 2010

We’ve been spending too much time on elections, so let’s get back to pointing out inane, foolish, and destructive government policies. Our latest example comes from the United Kingdom, where politicians are pushing airline ticket taxes to punitive levels and harming the tourism industry. But the real lesson from this story is that it is very dangerous to give politicians a new revenue source.

The airline ticket tax was first imposed by a supposedly Conservative Party government in 1994 at a maximum rate of 10 pounds. During the Blair/Brown Labor Party reign, the tax was boosted to a maximum rate of 50 pounds. Now, the new government, led by ostensible Conservative David Cameron, is pushing the maximum tax up to 75 pounds (more than $120) per ticket. Here’s an excerpt from the story in the Telegraph.

Families are avoiding holidays Egypt and Caribbean because of the high cost of air taxes – even before the hike in passenger duty that comes into place on Monday. …The duty, which is paid by all travellers on leaving Britain and added automatically to the price when a ticket is booked, is to increase by 50 per cent to some destinations. It is the second significant rise in two years, and figures show that previous hikes have already influenced people’s choice of holiday destinations. …Bob Atkinson, travel expert at Travelsupermarket.com, said: “Families looking to book for this winter and summer next year will be faced with tax rises of up to 54 per cent on their family holidays. This tax rise is completely out of line with inflation and bears no relation to the original purpose of the tax. …The tax was introduced in 1994 at the rate of £10 on long-haul flights, but increased by the previous Government, which said it was a necessary “green measure”. …The increases mean a family of four flying to the Caribbean will pay £300 in duty compared with the old rate of £200 or £160 last year. Willie Walsh, the chief executive of British Airways, has branded the higher taxes a “disaster”. Earlier this month, he called the duty a “disgrace”.

No wonder families are choosing not to travel. But, more important, imagine what American politicians will do if they ever succeed in imposing a value-added tax. The rate initially will be low (just as the original income tax had a top rate of just 7 percent), but nobody should delude themselves into thinking the rate won’t quickly climb as greedy politicians get hooked on a new form of revenue cocaine to feed their spending addictions.

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In the grand scheme, I realize red-light cameras are not very important, but I was absolutely delighted to see that Houston voters approved a referendum to stop the city from using these devices. Red-light cameras should be called revenue cameras because local governments almost always use them to collect more money rather than to promote safety. Indeed, there’s good evidence that they cause accidents, in part because governments shorten yellow lights in hopes of raping more motorists.

 The same is true of cameras to catch speeding. In my life, I’ve been nailed a couple of times by those devices, and in every case it involved an absurdly (and deliberately) low speed limit (including 45 on an interstate highway and 25 on a four-lane road in a non-residential area).

The fringe benefit of this Houston referendum, by the way, is that the city will be forced to spend less. The City Controller acts as if this is a terrible result, but one quick solution for the city’s budget problems would be to limit average pay for all government officials to the average of private sector pay in the region. Here are some excerpts from a story in the Houston Chronicle. Read and enjoy.

Houstonians rejected the city’s red light camera program in a hard-fought ballot contest, delivering an immediate $10 million hit to an already dire budget situation at City Hall. With all votes counted, 53.2 percent of voters demanded a decisive end to the use of the devices, which had been used to issue more than 800,000 tickets and collected $44 million in fines since 2006. …City Controller Ronald Green said the loss of the devices would amount to a $10 million shortfall in revenues, a sharp decrease that would greatly complicate efforts to close a shortfall that was already nearing $80 million. “We’re going to have to cut expenses,” he said. “We need to really start talking about the fact that furloughs and layoffs may really be a potential option. … It’s now time for drastic cuts.” Jim McGrath, a spokesman for Keep Houston Safe, said he did not anticipate that the political action committee — backed by the Arizona-based company that runs the city’s red-light camera program – would try to fight the election results in court.

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