Monday, August 11, 2014

Gareth Morgan, tax and democracy

So, in addition to hating cats, Gareth Morgan hates something else: democratic control over the tax system:

I think the time has come to consider creating an independent tax authority, ‘under renewable contract’ to Parliament. The tax authority would be tasked with achieving revenue targets subject to operating within prescribed limits set by Parliament such as the balance of revenue to be collected between income, wealth and expenditure taxes, goals relating to redistribution from rich to poor, and the parameters of some specific corrective taxes such as those currently on tobacco, booze and fuel. This is just like the ‘policy targets’ agreement the Reserve Bank has with Parliament.

Beyond that, the authority would be free to design the tax regime that would collect the revenue in the most efficient way. Assuming they chose the right chief, the tax authority would be governed by the widely accepted principles of a good tax system – fairness, efficiency and simplicity.

All of this probably sounds great to technocrats. But what it means in practice is that decisions about who pays what will be made by people who are unelected, and hence unaccountable. Morgan doesn't see that as a bad thing, because he views democracy as the problem here - politicians wanting to get re-elected "distort" policy away from efficient and optimal solutions. While I agree with some of those solutions (such as land taxes and wealth taxes), I cannot agree with the idea of imposing them without any democratic mandate. Nor can I agree with unelected philosopher-kings. The problem with unaccountable rulers is that they are completely free to work against you - and given the dominant ideology amongst modern technocrats, that's pretty much a certainty.

As I've said before, democracy isn't about making good decisions, but our decisions. Its not about producing optimal policies, but about moderating conflict and reaching a solution everyone can live with and regard as legitimate. With unaccountable philosopher-kings, the only way to change their decisions is to murder them. I would rather not introduce that level of bloodshed into our political decisions. Instead, I'll murder my political opponents symbolically at the ballot box this September, and accept suboptimal policy as the price I pay for a peaceful society.