Adam Smith Institute

Are pay-as-you-throw rubbish charges a tax, or not? This is a question that seems to be occupying the Daily Mail at the moment...

The government has been very careful not to refer to the proposed charges as taxes, preferring to term them 'incentives'. But now environment minister Joan Ruddock has apparently told MPs: "I have just been told by that technically these charges are regarded by the Treasury as a form of tax." Unfortunately, she may be right. But that's because the pay-as-you-throw scheme being trialled by the government is not really a pay-as-you-throw scheme at all.

A proper scheme could work as follows: refuse collection is privatized; people choose from a number or competing refuse collection companies; people pay according to how much refuse they have to dispose of; council tax bills are reduced accordingly. Such a system would encourage people to produce less waste, encourage more recycling, and lead to a higher quality of service (if people were not getting enough collections, for instance, they could change to a different company). With lower taxes and competing service providers, you would get better value for money too.

The government's scheme, by contrast, seems to consist of fining people who don't recycle, and (just possibly) giving a limited council tax rebate to people who do 'go green'. It's is another example of politicians getting their hands on an economically sensible idea, messing it up, and making it unpopular with the general public. And that makes it much harder for the original, better idea to be implemented.

Little Johnny watched, fascinated, as his mother gently rubbed cold cream on her face. 'Why are you rubbing cold cream on your face, Mummy? he asked.
'To make myself beautiful.' said his mother.
A few minutes later, she began removing the cream with a tissue.
'What's the matter?' asked Little Johnny. 'Giving up?'

Yes, I know, you'll have seen it too:

People in medieval times were healthier than modern Britons because they did not suffer from cholesterol related diseases, it has been claimed.

While those living in the Roman and Tudor periods faced hazards such as the "pox and plague", it seems that their daily diet lacked foods which could lead to heart disease.

The research also claimed that daily exercise has decreased by at least an average of 96 per cent since Roman and medieval times from eight hours a day to less than 20 minutes due to increasingly sedentary lives.

Or perhaps they were all being worked to death? 

Research by Lloyds pharmacy, the chemist chain, found that the daily diet consumed by Britons in the Roman period of fruit, fish, whole grains, vegetables and olive oil washed down with red wine amounted to approximately 120g of fat, 80g of protein and 600g of carbohydrates.

That is indeed a healthy (and often scrumptious) diet but the most important point is this:

Dr Henderson said: "The Roman diet was healthy provided you were wealthy enough to afford..."

Economic principles being independently (re-) discovered, a la Matthew Parris this morning. Here it's the point that it isn't so much technology, nor innovation, which drives the whole system forward, it's the application of innovations and technologies.

The US Energy Bill is described as "A moment of idiocy, of real idiocy ". As the European Union suggestions reported today are very similar, perhaps we should use the same desscription? 

More climate change. A video from TED about geoengineering . Yes, we know it works, so why don't we try it out? 

The new rules on mobile phones and driving are really rather less than they seem . 

Stuck in the office this week with no work to do? A timewasting game for you. 

Tsk, tsk, welching on a bet really isn't on. Doesn't everyone know that a capitalist economy depends upon trust? 

And finally , infinite recursion, or how Windows may destroy the Universe. 

The European Commission has delayed making a controversial announcement which could see the state health plans of one Member State paying the costs of patients who opt to be treated in another EU country.

The idea of the plan was that British patients, say, could travel to Spain or Hungary for their treatment, as many do - with Britain's National Health Service picking up the tab. Part of the argument for this is that some countries have more efficient healthcare sectors, with shorter waiting times, for example, and EU citizens should be able to benefit from the competition between them. Following the case of Yvonne Watts, who had a hip operation in France and sent the bill to the NHS, Britain's High Court ruled that the NHS should pay for treatment abroad if patients otherwise had to wait too long. Quite right, I would say.

Already UK doctors are whingeing because they know that lots more people would indeed go abroad for treatment if the NHS was forced to pay for it, rather than put up with the sink service they get in the UK. The British Medical Association's Dr Vivienne Nathansan said that if people started travelling for operations there might 'not be enough need' for that treatment in the UK, which could lead to closures. Yes, well that's competition for you, Vivienne.

Meanwhile Nigel Edwards of the NHS Confederation complained that the EU plan was a stalking horse to create a 'free market' in European Healthcare. Oh, if only it were. We're talking about harmonizing state health plans here. If the EU actually created the conditions for a proper, open market in healthcare - one that wasn't dominated by doctors and politicians - I think we'd all be a lot fitter.

Linda, a radical feminist, was getting on a bus to go to work.
As she walked down the aisle to find a seat a man just in front of her got up.
Linda thought to herself. 'Here's another man trying to keep up the customs of a male-dominated society by offering a poor defenceless woman his seat,' and so she pushed him back on to the seat.
A few minutes later, the man tried to get up again.
Linda was further insulted and refused to let him up.
Finally, the flabbergasted man said, 'Look, you've got to let me get up. I'm two miles past my stop already!'

In a speech in Beijing this week, shadow chancellor George Osborne signalled his intention to announce proposals to slash corporation tax in the New Year. Saying a Tory government would offer a "sustained programme of lower taxation" and promising to reduce the tax burden on companies and individuals in every Budget as chancellor, he pointed to Ireland as an example of the correct response to an "intensely competitive global environment". Ireland's corporation tax is 12.5 percent.

That's all very encouraging stuff, and clearly the Conservatives have been emboldened by the popularity of their inheritance tax plans (only millionaires will pay). And corporation tax is a good place to start, given its importance to the UK economy. Even after the 2007 budget has come into force, Britain's headline rate will be 28 percent – 8 percent higher than the OECD average. In a globalized economy, that really matters because companies (and people) can easily relocate to lower tax jurisdictions, taking jobs and capital with them. So if the UK wants to remain competitive, lowering corporation tax is a must.

It isn't just a matter of international comparisons though. Corporation tax is inherently a bad thing, and the less of it we have the better. Reducing corporation tax would create stronger incentives for hard work, innovation and enterprise, increase business investment and, ultimately, lead to higher GDP. Indeed, according to the Taxpayers' Alliance's dynamic model for the UK economy, if we cut corporation tax rates to Irish levels by 2016, GDP would be 8.7 percent higher than it otherwise would have been by 2021. Total employment would be boosted by 8.7 percent and disposable income would be 13.5 percent higher. Economic growth would actually deliver a high overall tax rate too, so everyone wins.

Of course, the Irish 12.5 percent may be a little too much to hope for, even at Christmas. But the Conservatives' own Tax Reform Commission, headed by Lord Forsyth, proposed an immediate cut to 25 percent, with the aim of getting to 20 percent over time. That would certainly be better than a lump of coal.

I think I've seen him on the telly. He does not look very trustworthy. He looks like a bad Paul McCartney impersonator.

– Newcastle shop manager Ailsa Dixon gives the Daily Mail her verdict on Nick Clegg, the new Lib Dem leader.

Sadly, this is something that most forget. The efficiency of the distribution system (ie, all those supermarkets) is far more important to our standard of living than that of the manufacturing sector. (As an aside, excellent Julie Burchill on this subject here .)

More on just how progressive the US Federal taxation system is. The top 20% of earners provide almost 70% of the revenue collected.

Given the slow week before Christmas, should be time to join in this game . Find the elementary mistakes in this paper on fair trade bananas. For bonus points, explain why the Fair Trade arrangement should not be fined like the supermakrets were over milk and cheese prices .

If that doesn't take up enough of your time, try the new William Nordhaus toy research tool . It's actually here . It's a way of visualising GDP for any one degree by one degree square on the planet.

Sad news on silly laws: the US online gambling ban . 

Sad news on taxes : pensions are going to cost us a lot more than anyone is admitting so far. 

And finally, yes, it is a real name and why being a drug dealer is better than being a geek . 

The Public Administration Committee yesterday called for changes in the law governing peerages. In the wake of the cash-for-honours scandal, they want more transparency and more powers for the electoral commission.

The report is bound to prompt renewed calls for a through-going reform of the Upper House. The current consensus is for eighty percent of peers to be directly elected by proportional representation on a regional party list system, with elections held alongside European Parliament ones.

This consensus strikes me as being one of those that seems like a good idea, but falls apart under closer examination. Firstly, the role of the Lords is to review legislation and protect the constitution and liberties from majoritarian tyranny. It is not obvious that elected peers would be better at this than appointed ones. Indeed, they would probably be worse: less independent and less willing to deviate from their party line.

Secondly, electing peers by party list would do little to reduce the role of patronage. Political parties could easily sell places at the top of their lists, as they have sold honours in the past. More generally though, the quality of people on party lists would probably be lower than that of current appointees. One of the best things about the current Lords is the availability of a wide variety of specialists, who would not otherwise be involved in the legislative process.

A better reform would be to genuinely put appointment in the hands of the Monarch, who would act on the advice of a statutory, independent Appointments Commission, without the involvement of the political parties. At least a quarter of peerages should be reserved for independents, and remaining appointments would be made in proportion to the parties' share of the popular vote in the most recent general election.

A more radical option, which tends to be favoured by libertarians, is to appoint the upper house by lottery – like a legislative jury service – for short terms, perhaps even for single sessions of parliament. It's certainly an interesting idea, but there are plenty of problems with it, and I doubt it's a realistic option.

A young boy was looking through the family album and asked his mother, 'Who's this guy on the beach with you with all the muscles and curly hair?
''That's young father.'
'Then who's that bald-headed fat man who lives with us now?'

Global warming is allegedly coming faster than even the most alarmist campaigners expected. They have once again had a field day in bashing America, for its insistence that big emerging polluters should come on board the bus to mitigate climate change. This is a classical example of Alexis de Tocqueville's law: once the dynamics of an insurgency have been unleashed it is unlikely to be settled by compromise even if the reigning powers want to — instead they spoil it with escalating demands.

In any case, there is probably no need for all this fuss about short–term emission cuts. Just allow the market to do the job.

There is now evidence that the US approach, with prizes for the invention of low carbon technology, is actually working. Recently the Bush Administration announced that U.S. emissions of carbon dioxide fell by 1.8 percent with all greenhouse emissions down 1.5 percent from 2005 to 2006 even though the economy grew by 2.9 percent.

This reduction was accomplished through prizes and greater use of lower carbon energy sources. We know that most EU countries are failing to achieve their Kyoto commitments and yet even those who do manage to meet their Kyoto-set targets tend to do so for reasons other than climate change mitigation politics such as the breakdown of socialist economies.

The EU hasn't yet released figures for 2006. But from 2000 to 2005, the U.S outperformed Western Europe. Carbon emissions were up 3.8 percent in the so-called EU-15 during those years, versus 2.5 percent in the U.S.

Another week, and another scandal hits the government. I am almost beginning to feel sorry for them... Almost, but not quite!

The latest trouble comes in the form of the lost details of three million learner drivers by a DVLA sub-contractor in Iowa, USA. The details include names, addresses and phone numbers and the US police say the missing hard drive is unlikely to be recovered.

It just serves to underline why we really shouldn't let the government centralize all of our personal data on one big national ID-card database. How long before a disk or hard drive goes missing, or the system gets hacked? How much proof do we need that the government cannot be trusted?

Of course, it hasn't taken the unions long to seize on the fact that it is a private company that has lost the data this time. Apparently such a dreadful lapse would never happen if the public sector was allowed to do the job.

But hang on, who was it that lost the bank details of 25 million people last month? Oh yes, HM Revenue & Customs.

Funny how short the left's memory is...

So, This Reform Treaty: do you know how they made it shorter than the original Constitution? They, err, changed the font size and the line spacing. The "mini-treaty" is actually 15% longer by words .

On the subject of laws, one MP admits that he cannot possibly read everything passed by Parliament. The solution, as we all know, is that Parliament should be passing fewer such. 

And just think how little they could do if they passed a truly flat tax : 1.8% of income, like one canton in Switzerland. 

For as we're becoming increasingly aware , it's not how much money is spent but how the money is spent that gets what we actually want, results. 

When is it price gouging, when simply a sensible response to supply and demand? Perhaps when it violates social norms ? 

Well, quite, if you've got a problem, do what you need to solve that problem , not upend the entire system of contract. 

And finally, an economic conundrum and Microsoft's new new operating system. 

According to reports in yesterday's Financial Times, the government are finally going to heed our advice and put the Tote (the state-owned betting company) up for auction. As we have consistently argued, from our influential 2004 report At Odds With Taxpayers to the present day, this is the only fair and straightforward method of finding out what the Tote is actually worth, and getting good value on the sale for UK taxpayers.

The government's original plan was to simply sell the Tote to the racing industry and the Tote's management at a knockdown price - "for the good of racing". However, the ASI challenged the government through a formal complaint to the European Commission's Competition Directorate, which twice ruled that the government's backroom deal with the racing industry would constitute an illegal use of state aid.

In any case, the racing industry and the Tote's management have only managed to muster £330 million, well short of the £400 million valuation placed on the Tote by PWC, the accountancy firm.

However, if the Treasury now goes ahead and auctions off the Tote, the price realised may be north of £500 million, according to our City sources. That is good news for UK taxpayers, and good news for racing too - since the government plans to give something back for 'the good of racing'.

However, it is worth remembering that horse racing as a sport and business has never been more prosperous. It would be far better to put the revenue raised towards cutting some taxes and maintaining some sports grounds, so that British kids can get some more exercise.