Business Investment Low Public Spending Low Tax Low Wage Economy
Large multinational business corporations influence elected governments (and parties aspiring to government) by insisting on low taxation if they are to invest in a country. This enables lower wages to be paid to their employees with a lesser affect on disposable incomes.
Thus creating a low wage, low tax, low public spending economy. In a modern capitalist democracy if a government insisted on high taxation to pay for high quality public services then it would be economically bankrupt because of lack of investment.
To suggest that business conspires with government to raise taxation, in particular with respect to environmental taxes to offset the effects of climate change, is flawed economically. In fact business interests and governments electoral expediency both point in the direction of low taxation, although political parties in government have a responsibility to provide adequate public services for its citizens.
Environmental taxes are often introduced as replacement taxes, and government revenue actually fluctuates very little, as a percentage of GDP, only two to three percent over the last 50 years. Whenever a particular tax is lowered then a corresponding rise in tax is imposed elsewhere, and conversely when a tax is increased, or a new one introduced, then there is usually a corresponding decrease in taxation elsewhere.
Lib Dem tax plans a "blunt instrument", which won't redistribute wealth -Greens
31st Mar 2005
The Green Party criticises Council tax proposals by the Liberal Democrats.
Green economists have criticised the Lib Dem local income tax plans as a "a vote-grabbing exercise, which won't redistribute wealth", and laid out plans for Green Land Value taxation instead.
Green economist Molly Scott-Cato, comments: "The Lib Dem's contradictory tax plans are no more than a vote-grabbing exercise.
"They would scrap regressive council tax on the grounds that they are interested in redistribution, but replace it which a tax which is unrelated to the size of people's property - even if they are vast, speculative landowners.
"Local income tax consolidates money and resources in all the most affluent areas - this is obvious - yet the Lib Dems have offered no clear plans to redistribute this wealth."
She continues: "The fairest system of local income taxation still remains the Green Land Value tax, which will be related to property values, taking into account large landholdings for the first time. It will also apply to business properties, and be used in conjunction with the planning process to encourage sustainable business development."
Greens would introduce a land value tax. This would be set at local level and based on the annual rental value of the land. Its' benefits are: - that it will tax empty, speculative property - be accompanied by an Independent Commission to Oversee Central Redistribution - can be used in conjunction with the planning process to encourage sustainable development.
As a transitionary move towards a Land Value Tax, the Green Party would reform Council Tax by:
- ending reductions for underused properties (with the exception of the single person occupancy discount for pensioners). - creating new Council Tax bands for more expensive properties.
LOCAL TAXATION - The Green Party Case For Land Value Tax
The Council Tax is a bad tax, paying no attention to ability to pay and Greens welcome the Lib Dem attack on the tax. We are also in sympathy with their suggestion that taxation policy should be set at a local level, which is consistent with our overarching economic objective of creating strong local economies, although inconsistent with the Liberal Democrats commitment to globalization.
The revaluation that has already taken place in Wales is in fact a means of increasing rates of taxation by the back door, which is clear from the large number of properties being moved upwards through the bands. Since the system is a relative one, an increase in house prices should make no difference to the number of properties in each band, so the fact that more properties are being placed in higher bands is simply a way of disguising an increase in taxation.
There are two main confusions with the council tax:
· It does not relate to the services used by the payer and paid for by the council but rather to the size of property, which makes it feel doubly unfair;
· It is supplemented in an unfair and deeply political way from a national fund, giving preferential treatment to local councils controlled by the same party as that in power nationally, hence the Liberal Democrats anxieties.
An Audit Commission report published in December 2003 branded the system of government funding to local authorities as flawed, difficult to understand and unsustainable. Because three quarters of what the council spends comes from government, when that amount is cutback they can only raise enough money to pay for essential services by tax increases or service cuts. That means that for every 1% rise is spending local authorities have to put up Council tax by 4%.
However, the policy response proposed by LDs, a local income tax, is a blunt instrument and will have unpredictable effects on peoples decisions about work and migration, especially when combined with their proposed national increase in income tax.
The Green Partys policy is to abolish the Council Tax and replace it with a system of taxing land values at a local level. As a party that respects our total dependence on this planet the Green Party recognises that land is our most important resource. The value of land to the community as a whole should be reflected in a new tax to be paid by those who own it. A system of Land Value Taxation should be introduced to replace the Council Tax and the Unified Business Rate. It should be set at a local level and based on the annual rental value of the land.
There should be no reduction of or exemption from LVT for buildings which are left vacant or allowed to fall into a state of disrepair, thus encouraging the full use of existing property and discouraging property speculation. It also has the advantage of combining the individual and business taxation systems. The Lib Dem proposals noticeably fail to mention changes to the Unified Business Rate, which is a far more unfair tax than the Council Tax but does not affect most voters directly.
Any locally based system would also need to find a mechanism to deal with the problems of redistribution between wealthier and less wealthy regions of the country, another issue that has not been thought through in the LD proposals. The Green Party has proposed the establishment of an Independent Commission to Oversee Central Redistribution in order to ensure that central government does not squeeze local authority funding so as to take credit for keeping general income tax levels low. This Commission would supervise a redistribution of wealth and resources between districts and regions with differing tax bases based on objective criteria including factors such as net migration, poverty and social deprivation, industrial base, natural resources, and environmental damage.
As a transitionary move towards a Land Value Tax, the Green Party would reform Council Tax by:
· ending reductions for underused properties (with the exception of the single person occupancy discount for pensioners).
· creating new Council Tax bands for more expensive properties.
· reforming the multiplier rates to make bills more proportionate to the value of the property. This could reduce Council Tax bills for 80% of dwellings, with particularly significant reductions for those in the lowest value houses. It would consequently ensure that the Tax better reflects an ability to pay.
Note: The following can be found on LD website:
LIBERAL DEMOCRATS LAUNCH 10 POINT PLAN FOR LOCAL GOVERNMENT - FOSTER
10 December 2001
Give Business a Stake in Local Communities
Liberal Democrats propose a two-stage process with the return of National Non Domestic Rates to local control as first step. The income that a council would receive from local businesses and householders will be assessed by central government, before allocating how much central government grant money should be redistributed. Councils should be allowed to pilot Site Value Rating to allow good practice in UK system to develop before moving to wider adoption of SVR over time.
The proposal is not being headlined, but the idea of Site Value Rating is similar to Land Value Taxation.
Income Tax
EC710 Income Tax is the instrument by which all citizens who are able to are required to contribute a proportion of their labours to the running of public services. It is also, when combined with benefits payments, the primary way in which wealth can be redistributed in order to create a fairer society.
EC711 Personal tax-free allowances will be abolished, having effectively been replaced by the Citizen's Income (see EC730). Income Tax will be levied on all income above the Citizen's Income. Tax rates will be banded and will increase progressively so that those on higher incomes are paying higher marginal rates of tax.
(EC730 A Citizen's Income sufficient to cover an individual's basic needs will be introduced, which will replace tax-free allowances and most social security benefits (see EC711). A Citizen's Income is an unconditional, non-withdrawable income payable to each individual as a right of citizenship. It will not be subject to means testing and there will be no requirement to be either working or actively seeking work.)
EC712 In order that people are not penalised by paying high rates of tax in one year, whilst their income dramatically drops in the next (either through personal choice or for reasons beyond their control) income will be averaged over five years and the tax calculated on the rolling average figure.)