Systemic Fiscal Reform

Not everyone is in recession...

2009-01-05T07:25:00.001-08:00

Have you stopped to think recently about the fallout of the current recession?

The government has slashed interest rates and unemployment is up, but this is not bad news for everyone.

If you're a policeman, fireman, doctor, or people in many other essential jobs, then you've got nothing to fear about losing your job, and no one's going to cut your income, but, right now, you've got it sweet!

That huge mortgage has shrunk no end, as interest rates have dropped hugely (I personally know people who are over £700/month better off, and I'm sure there are bigger winners).

Yes, while those who were until recently employed in the boom jobs of the retail sector are applying for every benefit they can get wondering if they're going to lose their house, there are some who are looking to that extra ski holiday, with holidays going for a song, and a stash of cash saved on their mortgage.

For those of us who aren't in that lucky position, we've got one consolation: they've still got to buy some Euro's for their food and ski passes, and the Euro just got mighty expensive!

Is the Green New Deal actually green?

2008-12-02T06:17:00.000-08:00

In a review of the Green New Deal, Neale Upstone argues that the nef's proposed "Green New Deal" has some serious flaws, as it fails to answer the big issue of how we solve poverty without perpetual growth.

Money As Debt - How Banks Create Money From Nothing

2008-09-25T08:56:00.000-07:00

An Introduction to SFR - Policy

2008-09-01T08:00:00.001-07:00

Introduction

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 Taxes

Income 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' Income

All 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 taxes

Most 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.

Subsidies abolished

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.

When Taxes Change, Who Pays?

2008-08-01T06:53:00.001-07:00

"Tax incidence" is the analysis of who actually bears the burden of a tax.

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]

SFR - The Nexus of Political Thought

2008-07-24T10:46:00.000-07:00

Here's a potential logo for the website and our campaign.

Yes... if you're a UK voter, those colours do mean what you think!

SFR benefits all 4 corners of the political compass.

Churchill on Poverty and Taxation

2008-07-20T10:40:00.000-07:00

In this speech, Winston Churchill speaks about how the taxation system tightly bound into what does and doesn't get taxed.

Conservatives surveyed on which tax they'd cut first

2008-07-16T03:56:00.000-07:00

ConservativeHome reports that the tax most preferred to be cut first by their respondents, was Inheritance Tax. While this clearly identifies those people as likely to be land owners, it does also hint at a tax that would be popular to reform.

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.

Ricardo's Law - The Great Tax Clawback Scam

2008-07-08T04:46:00.001-07:00

A great explanation of how taxes on wages are subsidising the wealth of land owners.

The Tax Source Triangle

2008-07-07T07:31:00.001-07:00

The proposal for Systemic Fiscal Reform argues that we should abolish taxes on productive behaviour such as Income Tax, Corporation Tax, National Insurance and VAT, and raise the same revenue from taxes on behaviour that we want to discourage.

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.

Introducing Systemic Fiscal Reform

2008-06-21T08:35:00.000-07:00

The following Jing recordings are limited to 5 minutes each (totalling 19 minutes), and in total cover the full presentation that was given in Cambridge on 16th May.

Do beware that the voiceover will be a bit poor in quality due to the lack of the ability to edit a Jing recording.