Promising new Tory ideas

At the recent UK Tory party conference George Osborne shadow Chancellor of the Exchequer proposed increased taxes on aviation with the aim of reducing carbon emissions. The interesting extra included was a ‘family fund’ that would match these taxes with tax cuts for families. This is central to the ideas in The Free Lunch (pp.65-68) where the raising of taxes on resources, that is, green taxes, is proposed along with reductions in conventional taxes.

Another idea from The Free Lunch and the Tory Party is to protect back gardens from the wholesale high density development that is becoming the norm for new houses. See chapter 5 for a critique of this policy to provide ‘more environmentally sustainable’ cities and towns, (especially pp. 72-79).

The Tory Conference proposal to raise inheritance tax (IHT) to start at £1m was, within days, taken and modified to £600k by Labour Chancellor Alastair Darling in his Autumn Statement. The Free Lunch proposes the elimination of inheritance tax on property altogether (pp. 65,67) following the annual levy of the green taxation on the value of all land including that of homes.

What will now happen with these raised IHT limits is that the huge rises in land values linked to most homes will escape any tax. The families of homeowners will keep the valuable unearned ‘free lunch’ that renters of homes never have to pass down to their families. However this IHT reform is a good start as it clears the decks for introducing an annual land value tax. It would be difficult to launch an annual land value tax with the threat of a low IHT limit still around to raise the opposition of the vast mass of home-owning voters.

The Free Lunch proposes another idea to ease the passage of such a controversial tax, based on bringing greater fairness. Visit www.the-free-lunch.com , read the book.

(Proven) Green Taxes – 2

Do green policies achieve what they are aiming at, or actually aggravate environmental problems? On 28 June a BBC Radio4 Today programme discussion on bio-diesel crops, it was suggested that to replace ordinary food crops with bio-diesel ones may not be environmentally clever. The point was made however that if the only crops that will grow in a location are bio-diesel ones then it probably is effective. Sometimes so many side effects of green policies need taking into account that it is difficult to justify them.

There is one area of green taxation that has proved to be effective on several counts. See the website: www.wealthandwant.com (click ‘Themes’ and then ‘Split Rate Taxation’). Look at the various examples of the property taxation of land values and building values. The higher the ratio of land value tax to buildings tax the less farmland is taken for building, the more efficient is the use of existing roads and drainage, and the less urban sprawl results. For over 25 years in the US State of Pennsylvania the results have been coming in to prove these facts. Comparisons can be made with similar towns which have not taxed the land of plots more highly than the buildings on them and in these cases such environmental (and also social) results are markedly poorer. Someone has studied 237 cases of Land Value Taxation world-wide and found similar improvements in all of them.

Our new UK Prime Minister, Gordon Brown should allow local authorities the option to tax land values as well as building values to raise their Council Tax. It is not a risky green tax policy – it has been proved to work. Read the book The Free Lunch –Fairness with Freedom for more on such themes and their beneficial outcomes.

See: www.the-free-lunch.com

Green Taxes and Fairness -1

Planet saving activity is getting increasingly popular. Regulations get ever stricter against pollution and businesses face high fines if they transgress, thus there is commercial sense in finding greener solutions because they cut such costs. They also gain favour with consumers which is so important for marketing - see the example of Marks & Spencer (Blog: January 25).

But if the habits of tens of millions of ordinary people are to change in order to lower the use of natural resources on a meaningful scale, there will be a financial cost to them. The living standards of the mass of many voters are going to be cut. There is substantial resistance to the idea of green policies and anything that will help to overcome this should be tried to pacify the skeptics – just in case the measures will later be seen, even by them, to have been necessary.

The book The Free Lunch –Fairness with Freedom explains how one attraction of a Citizen’s Income, a regular payment to everyone, is that compensation is targeted at the extra cost of the basic use of essential resources if green taxes are imposed. High usage would be surcharged without a compensating Citizen's Income payment and thus force some lowering of consumption.

The other way to overcome the poverty-inducing effect of green taxation, is to extend means-testing of welfare benefits for more and more people. This would lead to higher taxation due to the increase in bureaucracy. Besides many of those who are entitled to help fail to apply due to the complexity and the risk of state claw-back when mistakes are made, or earnings rise.

There is a choice on how green taxes are handled and it depends on which viewpoint is taken as to the relative importance between the individual citizen and the state. The Citizen's Income idea is rising in international importance (see: www.basicincome.org ) - in the UK we already have part of it, in the form of the unconditional Child Benefit.

See: www.the-free-lunch.com and buy the book.

Road Pricing & Citizen's Rights

There is a flurry of interest in the UK in road pricing centred on the 1m plus protests on Prime Minister Blair's 10 Downing St website. On the face of it road pricing is an equitable and green way to pay for roads, in that the user pays, congestion is reduced, the environmental impact is reduced and contributions made to other, usually greener transport facilities. This is what happens with the London congestion charge. You are renting the land you are using for a short period, and for popular times of the day or week you pay more.

Drawbacks include the more extensive use of less suitable roads as people avoid motorways and divert to lanes and narrow rat-runs, which would raise accident numbers. Also there would be a massive increase in the power of the state over the citizen in being able to know precisely where everyone is as soon as they turn their car key. Need the innocent fear this? Doesn’t the state know so much already? Would it matter that much?

Such issues are at the heart of the arguments in the book The Free Lunch – Fairness with Freedom. It studies new ways of paying for public services but with a strong emphasis on individual freedom and practical ways to achieve this. It rebalances the increasing growth of the state with benefits which reach right down to the individual.

One resolution of the road pricing ‘threat’, if it went ahead, is that some part of the money raised should be paid directly to each citizen as part of a new idea called the Citizen’s Royalty (also known as Citizen’s Dividend or Income). Thus the essential road user would have any extra cost from the road pricing charge reimbursed, and people who could reduce road use would gain financially and achieve environmental gains for all.

Buy the book: see www.the-free-lunch.com

Helping to reduce carbon footprints

UK retailer Marks & Spencer has decided to spend £200m in the next 5 years to lighten the firm’s environmental impact (Sarah Butler-The Times 15 Jan). The same paper (David Charter-22 Jan) shows that European business leaders think environmental concerns are more important than sustaining economic growth and over twice as important as promoting free trade. But what if India and China do not share the same concern and fail to act like M&S? The results of concerted action by European businesses and governments on environmental impact will not be seen for many years and may make little difference globally if the rest of the world fails to join in.

However the power of example could help. If European governments manage to manipulate taxes that reduced harmful environmental behaviour without wrecking economic growth the idea could catch on elsewhere. But to change behaviour this way on the scale needed will make the poor poorer and with less choice than they now have. The rich don’t have to bother to change their lifestyle – they just pay the extra. The Citizen’s Royalty (CR) idea would provide a solution. Suppose a government decided to raise fuel taxes yet more, in order to prove their green credentials and reduce consumption. Some of the proceeds of the tax could go towards a regular payment of a CR to everyone. We could all still carry on our essential activity by being recompensed for the rise, but excess would be curbed, as it would become more expensive. The richer among us who didn’t need the CR themselves could donate it to environmental charities.

The conventional way of increasing taxes results usually results in more bureaucracy through increased means-testing for the poor and in more higher earners needing welfare payments. The CR (also known as: Citizen’s Income or Basic Income), is the pro-citizen, green way of the future if we want the state to be rolled back and choice to be returned to people. The book The Free Lunch – Fairness with Freedom covers many areas of citizen-centered new economics in which there is a growing international interest. See also the blogs for December and: www.the-free-lunch.com