May 2011
Robert Nutter Watford Grammar School for Girls
The case for a tax on dogs
The tutor2u Challenge the Chancellor
competition this year asked students to
suggest a new tax for the Chancellor to
introduce in these times of huge fiscal
deficits. It is highly doubtful that anyone,
including the Chancellor, has thought of
taxing dogs – man’s (and woman’s) best
friend. Such a tax on dog ownership would
raise relatively little revenue, involve
significant set-up and running costs, be fairly
regressive and probably turn out to be very
unpopular. In short it would fail to meet
quite a few of Adam Smith’s famous Canons
of Taxation.
However, there is a fairly strong microeconomic case
for a tax on dog ownership. Indeed an independent
report by Professor Patrick Bateson in 2010 came
to the conclusion that a system of dog licensing was
essential to help deal with the growing number of
dogs and dog owners in the country. The UK
scrapped dog licences in 1987 when it was clear
that the 37.5p tax per dog was both widely evaded
and cost more to collect than was raised in revenue.
Since then relatively little has been done legislatively
to control the 10 million dogs in the UK who are
resident in 23% of households.
The RSPCA estimate that it costs £650 per year to
look after a dog properly- the private costs of dog
ownership. However, there are significant external
costs which result from dog ownership which are
not paid for by their owners. These include the costs
to the health service of dog attacks on people at
£3.3m, attacks on farm livestock valued at £2.8m
and costs arising from road accidents involving dogs
at £14.6m. In addition there are the costs of delivering
a comprehensive dog warden service such as dealing
with the nuisance of stray dogs and dog fouling
which are valued at about £50m.
Clearly dogs provide their owners with significant
private benefits including companionship and
sometimes personal security. Working dogs on farms
and in the police service as well as guide dogs for
the blind go far beyond that. Are there any external
benefits from dog ownership? Clearly those who
don’t own dogs often enjoy the company of other
people’s dogs and more significantly police dogs and
sniffer dogs have contributed to the reduction and
prevention of crime from which society benefits.
However, the external benefits of dog ownership
are unlikely to exceed the external costs, and in an
unregulated market the ownership of dogs is too
cheap and there are too many of them. Arguably
Robert Nutter Watford Grammar School for Girls
in 2011 the number of dogs is above the socially
optimal level where marginal social benefit =
marginal social cost.
In recent years there has been legislation attempting
to deal with the growing dog problem. There has
been the largely ineffective Dangerous Dogs Act
1991, the Clean Neighbourhoods and Environment
Act 2005 and the Animal Welfare Act 2006. The
Animal Welfare Act set up a dog code of practice
and imposed on all those responsible for dogs a duty
of care to ensure that the welfare needs of their
animals were met. However, many local authorities
do not provide adequate dog control services and in
recent years there have been some horrific attacks
on children by dogs as well as gangs using them
as a weapon. Hence, although this legislation has
not amounted to government failure, it has not
improved the situation significantly.
An annual dog licence (even with a compliance rate
of as little as 75%) costing each owner around £20
(less than 2% of annual dog care) would raise the
£100m needed to cover the costs of running a
scheme to reduce the external costs resulting
from dog ownership. The funds raised from the
dog licence would cover administration cost of a
database (£30m), the cost of a nationwide dog
warden service (£46m) and payment for human and
animal injuries resulting from dog attacks (£21m).
There is also the additional cost of all dogs being
micro chipped which would add another £30, a
one-off payment for each dog owner. About 35%
of dogs are micro chipped and the figure is rising,
but it is not yet compulsory.
In Europe 23 countries have a dog licence or
registration scheme and in those countries it is
considered as an essential part of a successful stray
dog control strategy. The UK coalition government
has recently been considering further legislation to
regulate dogs such as fines for dog owners whose
dogs attack people at the owner’s home. This would
possibly give protection to the 5000 postal workers
and 200 telecoms engineers who are attacked each
year. In addition dog owners could be given dog
control notices (nicknamed ‘dogbos’) if their dog
behaved aggressively. This would require the dog
to be muzzled and on a lead in public places; even
possibly banning the animal from some public places.
As things stand the government does not plan to
re-introduce the dog licence fearing an angry
backlash from the responsible owners of our best
friend. However, for many innocent people in the UK
the bite of a dog has been much worse than its bark
and thus stronger more effective legislation seems
necessary.