Tuesday, 2 December 2008
Thursday, 25 September 2008
Monday, 1 September 2008
Systemic Fiscal Reform is a radical programme for the reform of taxation, subsidies and welfare. It is designed to stabilise economies, improve quality of life, and it facilitates the transition to full environmental sustainability.
The principles of Systemic Fiscal Reform are widely applicable. Not only can they be applied to well established globally-scoped economies, such as those of the United States, Canada and the members of the European Union, but they can also be used by more bespoke or evolving economies such as Venezuela and South Africa.
The reforms mainly comprise the abolition of cumbersome and wasteful tax, welfare and subsidy systems, together with abolishing the bureaucracies which implement them.
In their place, a simple integrated tax and welfare system is introduced. This includes a number of existing taxes which have been found to operate effectively where they have been tried.
The wasteful burden of personal and corporate tax returns is generally eliminated.
Systemic Fiscal Reform Policy
No Income or Corporation TaxesIncome Tax and Corporation Tax are to be abolished (along with all payroll taxes, National Insurance payments and Gains taxes). In their place a Land Value Tax is levied on landowners, equal to the value of their land, but excluding any buildings, crops or other improvements. The land values are
calculated using a standard procedure applied by local assessors.
Landowners generally pay the annual fee in regular monthly instalments to their local government.
No Value Added or Sales Taxes
VAT and sales taxes are to be abolished. In their place, a uniform Carbon Tax is levied on all extraction and importation of fossil fuels. This Carbon Tax is in proportion to the pollution and climate change potential of the fuel when used in the normal way.
No Estate (Inheritance), Gift, Transfer or Stamp Taxes
Estate taxes such as Inheritance Tax and Accession Taxes are to be abolished. All Stamp Duties are to be abolished, including those on share and real-estate transfers.
No means-tested welfare benefits
Welfare benefits based on poverty and joblessness tests are to be abolished. Any welfare payments based on disability are retained.
Universal Welfare—a Citizens' IncomeAll resident citizens and lawful residents are entitled to claim a Universal Welfare payment called the Citizens' Income. Such payment is made monthly by the local government, and may be directly used by home owners and their families to offset or cancel out their Land Value Tax obligations.
Citizens' Incomes for those in prison and state-funded care are retained by the state to help pay the costs incurred. Those in state-funded education will have an amount deducted from their Citizens' Incomes to help pay for the education costs.
Other taxesMost other taxes, such as “Sin Taxes” (alcohol, tobacco and gambling), road and fuel duties can be retained. These remain operated on the principle that they reflect the differing effects on society and public costs which have to be paid for through health and other spending. Fuel duty should include aviation and shipping, rather than retaining the existing subsidy those transport modes receive.
For resources, a Landfill Tax is retained on the landfill disposal of refuse, reflecting the scarcity of suitable sites and the environmental harm.
An increased Insurance Premium Tax is levied on mandatory vehicle and other liability insurance to help pay for the police, fire protection, legal and social costs related to the insured activity. This replaces the fire and police component of Council Tax.
The TV license is abolished, with Public Service Broadcasting paid for through general taxation or a radio spectrum charge on commercial broadcasters.
Many tax-based subsidies cease to exist with the abolition of Sales, Value, Income and Corporation taxes. For example, tax exemptions on aviation, fuel, public transport, education and food simply disappear. Business subsidies such as investment relief, tax rebates, pension relief also disappear.
Explicit subsidies including those on energy and carbon emissions trading schemes should be abolished.
Friday, 1 August 2008
In setting any tax policy it is important to assess how a given tax affects those involved in a given transaction. In general, the tax incidence is split between the producer and consumer. This is in contrast to the 'flypaper theory' of tax incidence which naively assumes that the tax sticks wherever it first lands.
An explanation of tax incidence can be found on Wikipedia, where there are graphs showing the effects on different elasticities of supply and demand (i.e. how much increased prices cause a drop in demand, or an increase in production). There is also a good explanation at the Institute for Fiscal Studies which looks uses the important example of the effect of a Vodka Tax.
Here, I'll have a look at the current situation of taxes on road fuel.
[TODO: look up research on elasticity, and see if I can quantify the situation. Supply seems rather inelastic, hence massive variation in price as demand rises and falls]
Thursday, 24 July 2008
Sunday, 20 July 2008
Wednesday, 16 July 2008
Inheritance tax taxes wealth such as cash, shares, property and possessions. It partly acts as a tax on the untaxed gains of personal land ownership, but it also acts as double taxation on income that has already been taxed. It's a particularly distorting tax.
As an economy, we want taxes that encourage economic behaviour, and tax behaviour that deprives others of economic value.
If we are to do what is popular, it would be far more effective to raise the same revenue from a land or resource tax.
Perhaps the best approach would be to replace council tax above band H with a land value tax, which would raise additional revenue from those who's properties are in particularly popular areas, and scrap inheritance tax.
Tuesday, 8 July 2008
Monday, 7 July 2008
This 5 minute presentation introduces the "Tax Source Triangle", which cleverly illustrates the different ways in which tax can be raised, and how a future tax system may look.
Apologies for the quality of the voiceover. There isn't a facility to edit on Jing yet, so my 'mis-speaking' (thanks Mrs Clinton) is in there too.
Saturday, 21 June 2008
Do beware that the voiceover will be a bit poor in quality due to the lack of the ability to edit a Jing recording.