Monday, May 28, 2007
Now, a tax rise of around £50 is probably a fairly modest tax rise. I am sure their next council tax increases will be bigger. But what is particularly objectionable is that they have tried to spin it as a environmentally-friendly policy. To quote their letter:
There is no chance that this policy will achieve these stated objectives. Lambeth's tax is levied on car ownership, not use. Once someone has decided that they need a car, they will pay the same amount irrespective of whether they drive five miles a week or five hundred. There is no new incentive to limit non-essential car use. And while Lambeth will tax cars with larger engine sizes more, the extra is trival. Parking permits will cost £80 more for the largest cars, a bit more a full tank of petrol. Compared to how much more it costs to buy and run these cars, £80 a year will make no difference to people's decisions.
The main reason for Lambeth to increase the cost of parking permits is to raise cash. Yes, there are restrictions about where the council can use this cash, and the Lambeth will be investing the money into road safety schemes. But such hypothecation is also just a useful piece of PR which are easy to get round. The council can just reduce or slow the growth of funding for these safety schemes from central funds, and divert the savings for their own pet projects.
Saturday, May 26, 2007
The reason the SOAC figures are wrong is that they considered only the 74 tonnes they got hold of. They didn't think about the 300 tonnes left behind which is now worth more. Like any other good, with less cocaine on the market its price will increase. So, even as the drug lords suffer losses as some of their merchandise taken, they gain as what remains goes up in price. Research suggests that for every 10% reduction in supply, the price of cocaine increases by 12%. Therefore, the best guest is that the seizures of 20% of the European supply will have benefited the criminals by £25m.
So why, if all that drug traffickers need to do toincrease their
profits is to reduce their supply, don't they do it themselves. Because
they are not, whatever they may call themselves, cartels.
If one supplier reduced the cocaine he sells, there's nothing to stop
another stepping in to fill the gap. But the police, by seizing a chunk
of the market, effectively enforce a partial cartel.
Seizing drugs makes no economic difference to the narcotics industry. Not unless you seize so much that their consumers can't afford the inflated prices. To do that you would need to seize more than half the supply, and that does not seem likely. Of course, that doesn't mean that taking 74 tonnes of cocaine out of circulation is a bad thing. There will be less of the stuff to go around. But whatever sums of money are banded around by the police or the media, it's never going to be unprofitable to met a demand for an illicit drug.