Nice to hear the name of Arthur Pigou uttered in parliament this week. More than a century ago, the Cambridge economist came up with the clever notion of “externalities” — harms imposed on wider society by certain activities, which could then justifiably be taxed.
Perhaps Pigou should be bedtime reading for Rachel Reeves today as the embattled chancellor ponders how she is going to lift the tax take on November 26 without bringing the political ceiling down.
Rises in “sin taxes” can at least be softened by the argument that they militate against some of the country’s most pernicious ills, or at least help compensate society for the cost of mopping up after them.
