Tuesday, 14 June 2011

Sin and the price of fish - tax, inflation and the poor

I want to contrast two responses to the news today that inflation is higher for the less well off – a piece of information that quite frankly shouldn’t come as a surprise to anyone. The first response is from Billy (who has a job now):

We heard today that the inflation experienced by the poorest people is greater than that experienced by the richest. This is for the simple reason that inflation in food and fuel is much greater than inflation generally, and even more because the costs experienced by richer people are often represented in large part by mortgage payments on property, and the current minuscule interest rate is in fact making those payments lower than ever before. So feeding ourselves is getting more expensive, but feeding ourselves is also a much greater proportion of poorer people’s expenditure than it is of richer people’s.

All quite straightforward and matter-of-fact so far but then Billy hops over the dogfish:

It’s true as well that feeding ourselves is increasingly becoming not a means of nutrition, but a means of self-abuse. Channel 4′s modern day freak-show, Embarrassing Fat Bodies, illustrated this again last night in its trade-mark gory and repulsive detail. Much of this “eating as self-harm” has its roots in the kind of food people eat, and it’s equally generally true that the diets of poorer people are worse in this respect than those of richer people. One of the commonest explanations of this relationship is that bad food is also cheap food. Poor people cannot afford to eat well or healthily.

Quite what this has to do with inflation defeats me but Billy goes on to describe how his super-healthy diet comes for a mere £40 per week. Brilliant except that if you’re a single mum bringing up two growing kids on a low income that £40 per person adds up – to eat like Billy would cost over £120 per week. And, as Billy knows, that Mum has to find money to pay the heating and lighting, transport costs to and from the shops and various other costs. All from what – around £180 per week. The cheap food makes a difference and our mum can fill up her kids on stodge – cheap bread and meat, pizzas and tinned puddings for half Billy’s budget.

And our single mum can probably afford a few packets of fags and a couple of bottles of cheap wine because she’s buying that cheap food!

Which brings me to the other comment – from Chris Snowdon:

You will sometimes hear campaigners claim that the poor are the main beneficiaries of sin taxes because, having less money, they will be the first to cut down or give up and, therefore, get healthier/cut their carbon footprint/have more disposable income.

This is one of the great myths in public health that has endured despite decades—indeed centuries—of evidence showing the opposite. Tobacco is the starkest example because there has been a clear transition from smoking being equally popular across the social spectrum to it being—after 60 years of punitive taxation—much more prevalent amongst the poor. We know all this beyond a doubt. To continue pushing up taxes on undesirable products in the full knowledge that the poor are least likely to change their ways seems a little exploitative.
That’s right – the decision to keep raising taxes on booze and fags disproportionately affects the poor (and the old). The tax on smoking a hugely regressive and, it would appear, not having much effect on the consumer.

The real truth here is that the middle classes are more protected from inflation and those with large debts love it at the moment. Not only are their rates very low but that inflation is rapidly reducing the real value of those debts. Meanwhile the poor are paying more for everyday goods and Chris sets out the reason very clearly:

...one of the main reasons gas, electricity and food are so expensive is that the price has been artificially inflated to serve an alleged environmental agenda. Oil and wheat prices exacerbate the problem, but the price of diesel from the pumps pushes up the price of practically everything. In the UK, the majority of that price is tax which has been escalating since the 1980s, ostensibly to deter people from driving.
Likewise, there is a conscious effort to 'wean people' off fossil fuels, and the rising price of gas and electricity reflects the policy of successive governments who are forcing energy companies to use less efficient, pricier forms of power (obviously this is not helped by the fact that these companies are also greedy bastards operating in a sham of a market).

The next economic disaster in the making – the cartel of power companies, distributors and governments all hiding behind a wholly specious argument about reducing “carbon footprint” and “saving the planet”.

And in the meantime the poor are paying more for everything to fund the nanny state's obsessions and this grand environmental scam.



billynojob said...

First, thanks for quoting from my blog! I think the connection between the cost of nutritious food and inflation is obvious enough - if food price inflation can't be prevented it can be mitigated by buying cheaper food. My argument is simply that cheaper food doesn't necessarily have to mean worse food.

I provided some evidence for my £40 "super-healthy" diet, but your assertion that "mum can fill up her kids on stodge – cheap bread and meat, pizzas and tinned puddings for half Billy’s budget" is sadly left hanging unsupported. My point is that I doubt if such a diets is any cheaper.

The issue of "sin taxes" is, in your analysis, bleak indeed. The poor are locked into devastating their health, and efforts to re-direct their behaviour merely succeed in impoverishing them. So the choice is either even earlier death and poverty because we tax the vices less aggressively, or early death but even greater poverty because we continue to tax those vices stringently. Nice.

Once you get onto the routine climate change denial nonsense, and the vast conspiracy theory that's required to sustain your position that the science has been fabricated to create this "grand environmental scam", I fear all logic has flown out of the window. There really are none so blind as those that will not see.

A Poor point of view.... said...

"...one of the main reasons gas, electricity and food are so expensive is that the price has been artificially inflated to serve an alleged environmental agenda."

Prepay meter users often pay much higher charges than billed users of gas and leccy.
As for shopping, well if you are single, poor and a non driver then going to your local asda, lidl or aldi may be a bit of trek. Taking public transport and lugging 3/4 carrier bags of stuff around seems to be too much hassle as, for example, frozen food may start to melt on the way back, taking a taxi there and back will bring the pricing into alignment with the local, more expensive, shops.

It's just the way it is. It doesn't mean there aren't poor people who are lazy (There are).
But aren't there lazy people in all sectors of the community?