What's the point of taxing morality?

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Anyone with a sensible understanding of how damaging fuel emissions are to the environment will be utterly repelled by the Chancellor's concessions to the fuel protesters. These people clearly do not have the least interest in the wider implications of their actions, or the smallest inclination to embrace the ethics of high fuel taxation.

Anyone with a sensible understanding of how damaging fuel emissions are to the environment will be utterly repelled by the Chancellor's concessions to the fuel protesters. These people clearly do not have the least interest in the wider implications of their actions, or the smallest inclination to embrace the ethics of high fuel taxation.

Their popular support may have dwindled of late. But the fact that so many people across Britain rushed out in a panic to buy stockpiles of expensive fuel as soon as the prospect of it running out was mentioned, suggests one crushing fact. The protesters are by no means the only ones for whom high prices are not a deterrent to use, but simply a source of resentment, and an incitement to rebellion and panic.

Various people have argued that the key to tackling irresponsible car use is not fiscal penalisation but education. And it is true that it is an odd democratic tool that treats a tax as a fine. The high duty on fuel is justified not by its necessity for swelling the public purse, but by its high-toned objective of changing our behaviour. Essentially it is a morality tax, there to punish us when we do something antisocial.

Motorists are fined when they buy petrol, drinkers are fined when they buy alcohol, and smokers are fined when they buy a packet of cigarettes. Except that often they're not. The hauliers have gained concessions by blackmailing the Government. But increasingly, drinkers and smokers simply bypass the entire process of government punishment, by getting their supplies from different sources. The most spectacular example of rebellion by stealth is the growth in contraband tobacco sales. Officially, one in five cigarettes smoked in Britain is now an illegal cigarette on which no tax has been paid. Unofficially, the figure may be one in three.

And these tax-avoiding citizens aren't involving themselves here in some harmless, victimless crime that does nobody but themselves any harm. This is organised crime on a huge scale, dangerous and violent. In the last couple of months in Britain, two gangland executions have been linked to contraband smuggling, and one major cigarette manufacturing company is under investigation by the DTI for alleged collusion with tobacco smugglers. Illegal fags being sold on the British market cost the treasury £3bn at least.

Illicit alcohol sales are booming in Britain too, with breweries and pub owners estimating that the quaffing of cheap booze at home is leading to a drop in their business of around a quarter.

While the gangs are also involved in contraband alcohol, much more of this kind of illegal activity is done by the "men in white vans" who "booze-cruise" to Calais. There they can buy as much cheap alcohol as they want to, as long at they can "prove" they're planning a party (usually by hiring a village hall and showing the documentation). The rhetoric of Dave West, who owns a Calais alcohol store called East Enders, is similar to that of the fuel protesters. "I'm a firm believer that duty should be put down," he said in an interview. "I'm doing all I can to ensure that people break the law - like they did with the poll-tax."

Meanwhile, the Calais branch of Tesco nets 15 per cent of the group's entire revenue from wines and spirits - an estimated 4 per cent of all wines and spirits consumed in Britain.

Alcohol bought in Calais and sold on in Britain loses the Inland Revenue another £215m, and it is reckoned that around 27,000 British people are involved in the trade. Novel methods have been used to attempt to deter people from taking part in the scam. Newsagents selling bootleg beer and spirits have, for example, been threatened with the punishment of having their lottery machines taken away from them.

In the meantime, it's the honest fine-paying citizen who supplements the manpower needed to combat this illegal activity. Customs and Excise was given the cash to recruit another 1,000 officers to deal with the problem, in the March Budget statement.

Even casting all this aside, it is easy to see what kind of effect the high cost of alcohol has in this country. Happy hours attract binge drinkers, as do any events that offer free booze. High taxation does not seem to quell our appetite for alcohol in the least; it just encourages us to drink more, and more recklessly, when the getting's cheap.

With cigarettes, there is more evidence that high pricing is something of a deterrent. In countries with next to no duty on cigarettes, people smoke much more. But I think this may be connected to broader attitudes as much as price. No smoker gives up because of budget considerations alone, as any anti-smoking guru will tell you. And the fact that smoking has declined more among the educated classes than the poor is an indication that education about health risks is the crucial consideration.

With alcohol, the health risks are also huge but, oddly, less aggressively disseminated. The same could be said for car use, which I rather crankily believe is also an addictive activity. A classic sign of alcoholism, after all, is a personality change when you're under the influence.

How many stubbornly committed drivers, who choose again and again to drive when their journey could be make much less stressfully by other means, display a marked personality change when they are behind the wheel. (This idea is not as outlandish as it many seem. A German psychologist has recently announced his highly researched belief that even gardening can be as addictive as smoking, drinking or drugs. Gambling certainly can, and there are no substances imbibed there either.)

So, while I don't argue for the abolition of morality taxes, I do think they should be treated as a special case. I'm sure I wasn't the only person who found it a little stomach-churning when Tony Blair connected high fuel tax with rises in pensions. What is he saying? That we can't stop driving, however environmentally damaging it is, because we need the money?

Either this revenue is an ethical tax, designed to encourage us to change our behaviour, or it is simply an excuse, an opportunist tax levied by government because there's a bit of cash to be made by punishing people for socially unacceptable behaviour. The trouble at present is that it's a bit of both. Rather, these fines on socially damaging activity should be treated as a separate form of revenue. Taxes on fags should be used to fund smoking-related fiscal expenditures, and the same goes for taxes on alcohol and fuel, and any other taxes levied as a means of social control.

These sorts of steps may actually end in higher taxes for morally frowned upon products, but at least there will be an unshakeable internal logic to the ethics of such taxation. The user knows that their fine is necessary as part of her democratic right to indulge in such activity, while paying fairly the costs the country incurs by allowing that freedom. That's what the hauliers should have been told. Not that they were responsible for depriving pensioners, but that they were paying the price exacted by their own damaging choices.