Monday, February 24, 2014

PCC increases Police element of Council tax in Cumbria in line with inflation

I respect the views of those on both sides of the debate in Cumbria about whether the element of council tax which goes to fund the Police should have been increased.

I have always wanted to see council tax kept as low as possible. But I also want to see the police service in our county properly resourced.

What I find surprising is that nobody has mentioned the context - e.g. the current rate of inflation.

The Police and Crime Commissioner, after considerable discussion with the Police and Crime Panel, has decided to proceed with an increase of 1.93% in the Cumbria Constabulary element of the council tax.

The current rate of inflation as measured by the Consumer Price Index is 1.9%

In other words the increase is pretty much in line with the rate of inflation. It does not represent a material change in real terms.


Jim said...

Infation is a tax, its nothing more its nothing less. So to increase another tax to account for the fact that you have already been forced to pay the tax to another department is rather misleading to say the least.

Also the thing that got me, is that to raise it by the proposed 1.99% may have caused a referendum, I mean what a hideous thought, to actually give the people who are being held at a proverbial gun point a say in if thy think this is a good use, of what at the end of the day, is their own sweat and toil, what a thought.

Chris Whiteside said...

To equate inflation with a tax is too simplistic. You are using an argument which might be justified in a different situation at a time when it does not apply.

There ARE circumstances where you would have a valid argument.

Throughout history some governments have deliberately caused significant inflation or even hyperinflation as a means of evading their financial reponsibilities, sometimes by debasing the coinage, sometimes by allowing massive increases in the money supply.

In the specific circumstances where a government has done something like that, or has failed to do anything effective to stop double digit or higher inflation, it is fair to make comparisons between the impact on people, especially those with fixed incomes, and a tax.

Although even in those circumstances, to suggest that inflation is exactly equivalent to a tax is oversimplifying things.

But we are not in such a situation.

If the government is acting to bring inflation under control, or if it is already under control, then the comparisons with a tax do not hold water, and nor is it necessarly harmful to make adjustments to prices, taxes, and payments to correct for the distortions which the residual level of inflation would otherwise cause.

And in all candour, to describe inflation as a tax when it is running at less than the 2% target really does not make much sense.

Chris Whiteside said...

And a referendum on the sort of level of council tax rise we are talking about in absolute terms - 8p a week - is just not proportionate.

Jim said...

Inflation is a tax that is not being simplistic its just stating a truth. why dont we have private mints who coin gold or silver to requirement, just bring in the gold you mine and we will make it into a coin of any weight you like. the answer is simply beacuse governments can not control this or profit from any possible inflation. It is a tax.

your agument about an 8p rise not needing a referendum is at best a very very weak argument. I will provide a service to everyone in the country, its a service where by i will round off your bank account to the nearest 10p so if you have a balance of £100.12 i would simply remove 2p from your accound and provide you with a nice round figure in your account. Its a compulsory service though so you have to have it. You get no option and I am not going to ask you, after all who will miss the odd penny or two? - dont you see the problem there?

Jim said...

Government - a corporation whos ideas are so good the only way they can implement them is to make them mandatory

Jim said...

name another one that makes mandatory rules that apply to everyone. I could argue that my employer makes mandatory rules, but then i can always resign, and my employer has no power of control over say a builder, unless of course said builder is working for my employer by which they would use a contract to which both parties are ASKED do you want this job under these terms or not?

I dont want to adhere to the rules of a say a bowling club, who insist you cant wear jeans. Its not a mandatory rule because i dont have to join that bowling club, or go bowling there, if i really wanted to go bowling in my jeans then i would join another club who does not have the jeans rule.

But i cant say "i dont want to pay council tax anymore, and its ok I will make my own arrangements for someone to empty my bin"

Jim said...

let me just check i understand you here Chris, and I do ask with respect. Are you honestly saying that with all the fractional reserve banking, quantitive easing and constant government borrowing from the lender of last resort, that at no time has the "money" supply ever increased by more than 4% in a year?

Is that really what you are claiming?

And are you claiming that at the moment the "money" supply is not increasing by more than 2% each year?

I know about debasement, it was "coppernose" Henry VIII's favorite trick. But that printer in the BoE and Fractional reserve banking are even better, and its increasing the "money" supply on a far grander scale than even Henry could have dreamed of

Chris Whiteside said...

I have deleted a comment which I posted earlier today to correct an error. I found on double checking that I had misremembered by up to 1.2% some of the inflation figures for three years ago. Apologies for the mistake.

If you read the original post, what I said about inflation was precisely defined. It says, quote, "The current rate of inflation as measured by the Consumer Price Index is 1.9%."

That is the figure published by the Office for National Statistics (ONS), which has been published on a reasonably consistent basis since l996, and the manner in which it is calculated is described in detail and in a transparent manner on the ONS website.

If you want to operate on your own personal definition of inflation, that's your privilege, but I use the generally accepted definition as "The speed at which the prices of the goods and services bought by households rise or fall" (Quote from ONS).

That's because it is changes in PRICES, not money supply per se, which does the actual damage - it is price increases which destroy the value of savings, reduce pensioners to poverty, and erode differentials.

On the basis of that definition and as measured by the official CPI statistics, the rate of increase in prices during the term of office of the present government to date has usually been below 4%, has never exceeded five and a quarter percent, and dropped below the 2% inflation target last month for the first time in four years.

To repeat so that there is no possible confusion, this is a statement about the rate of change in consumer prices, not the rate of increase in the money supply.

As I explained in the second comment above, there have been far too many instances in history where governments have tried to improve their financial position by debasing the coinage or allowing rapid inflation, even hyperinflation, and it is not unreasonable to compare the effects on ordinary citizens, especially those unfortunate enough to have fixed incomes, of that kind of government action to those of a tax.

But where a government has succeeded in keeping inflation - e.g. the rate of increase in prices - well inside single figures and indeed is attempting and at least for the moment succeeding in keeping it to 2%, I don't think such a government can fairly be accused of using inflation as a tax.

With regard to the question of making things compulsory, the comment to which I was originally replying said that the only way governments could implement their ideas was "to make them mandatory." I pointed out that other organisations also have rules which are mandatory for the people who are subject to the authority of that organisation.

I would not dispute that governments are the only people who try to make rules which apply to everyone. To be honest I would consider that to be a tautological statement e.g. that it is true by definition.

Rules which are mandatory for everyone are called "laws" and any organisation which is claims the right to make them is effectively claiming the powers of a government.