A Stitch in Haste

One particularly stupid component of the United Nations’ latest “war on poverty” is a call for member nations to impose a $2 tax on international commercial flights into or out of their countries.

Chile has just become the third country, after the U.K. and (of course) France, to implement the tax:

Chilean President Ricardo Lagos announced the levy, part of a United Nations funding proposal, today at the United Nations in New York, the Chilean government said on its Web site.
…
“The challenges that we have are a call to action,” Lagos said. “We have to be an example with concrete deeds.”

“Concrete deeds” — in other words the Politics of the Warm Fuzzy Feeling. Just do something, no matter how stupid, irrational or counterproductive. Just do something.

Some hasty stitches:

–I strongly suspect that most people flying into and out of Chile are in fact not Chilean. What “example” does it send when you proclaim your willingness to tax strangers?

–It is incorrect to assume that only the rich or business travelers fly. Lower-income people fly too. Does it make sense to tax the poor to help the poor?

–It is incorrect to assume that air travel is perfectly inelastic or that the tax will not be eaten by the airlines themselves rather than passed along to travelers.

–Even if the passenger does bear the burden of the tax, what’s to stop her from reducing her consumption, in Chile, by $2 to offset it? Maybe she’ll spend $2 less on food, or wine, or souvenirs. This is exactly why hotel taxes are so counterproductive — politicians love to assert that “outsiders” pay the tax while conveniently blanking out the fact that every “outsider” dollar paid in taxes is a dollar not spent on local businesses.

–Finally, shouldn’t there be some connection, even a slight one, between the target of a tax and the recipient? At least with “sin taxes” the government is, supposedly, either imposing the tax as a deterrent or to compensate for the hidden costs (e.g., health care) of the activity. But even this flimsy-to-false rationalization does not apply to the “anti-poverty” flight tax. It’s just a tax for the sake of taxing, a naked transfer of wealth from a politically disfavored group to a politically favored group based on nothing other than politician whim.

And if there’s one thing the United Nations has an abundance of, it’s whims.

Hat tip to Tax Policy Blog.