The Press in Christchurch had a nice article in its business section on Monday by economist Eric Crampton pointing out that the idea of a "fat tax" is both bad economics and poor policy. Crampton attacks the case for taxing fatty food based on fiscal externalities. He points out that to deal with such problems would require a huge range of taxes and subsidies on almost very activity anyone could possibly be involved in. It would be hugely costly to administer and dangerous in terms of personal liberty. The optimal solution may be to do away with the public health system and have people take out private insurance. Optimal insurance rates would reflect your lifestyle. If you don't like the idea of getting rid of the public health system because of the inefficiencies that result from it, then the answer is to learn live with the externalities. The costs of dealing with the problems would be greater than the costs of living with them.
The article is well worth reading, but doesn't seem to be online, so you will need to find page B2 of The Press for Monday 17/12/07.
No comments:
Post a Comment