08 November 2012

Dear President Francois Hollande,

Au Tappiste in Paris
I know things are rough, and budgets need to be balanced, but are you out of your freaking mind? A 160% beer tax increase? It's clear you have no understanding of what tax hikes do to consumption.  Allow me to educate you.

Many years ago I wrote this article explaining why using excise taxes to reduce consumption (in this particular case, on tobacco) and increase tax revenue actually reduce consumption and tax revenue! Now, that's a 10% increase, mind you. I don't know if a 160% will cause a corresponding 100% decrease in consumption, but I'm sure it's in the 50% range. The only way the tax will work is if you require every French citizen to buy a bottle of beer once a month. I'm sure that will go over well with the Muslims in France.

The first news article I mentioned that France has lower beer taxes than other countries in the EU, but doesn't provide any data to back up the claim, so I am taking the statement with a grain of salt.

I'm going to go out on a limb here and say that if this tax is implemented, you will not acheive your goal to fund health care for the elderly. Maybe you should consider raising taxes on wine and cheese, too.

Picture source: rundagerously

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posted by Jeff Holt at 10:12

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