In a recent blog I looked at Brexit and concluded that the UK needed to build new international bridges, and fix the economy at home: to “find a progressive economic solution with working dignity for all communities, not just the winners“.
So, how might we solve the need for a progressive working economy for all communities?
Thinking broadly, we might imagine a money-free utopia where everyone swaps butter for eggs over the gate with their neighbours, and with exotic passing travellers swapping their silks and spices for your bread and ale. A sort of cosy Iron Age Emmerdale. That is, until you need antibiotics or an X-ray…
So, here in the 21st century, we need to make the economy work for everyone, even with money circulating which can so quickly leave a local economy to go into the bank accounts of a small, rich elite. Local sourcing is part of the solution, as it delays the eventual departure of money.
Well, tax policy is strong way to sort this out. But to date, tax policy has focused on things like Corporation Tax and how much tax companies should pay, and the scandals of their tax avoidance with offshore accounts. We need to bring tax policy nearer to communities.
Tax policy should be used as an instrument to shape local economies.
1. To start with, whether it is done as a benefit or a tax credit, create a minimum income for everyone aged 16 and above. This would be enough to live on, where work becomes a fulfilling choice and so that the worst jobs have to pay the best.
2. To encourage more employment, shift taxes away from payroll and on to harm reduction by taxing pollution, sugar, tobacco, alcohol, carbon emissions, empty homes, empty shops and derelict eyesores. Land is the most efficient tax base, as it is hard to hide or move offshore, and it can be the most progressive base as well.
3. Similarly, tax credit places used for social wellbeing such as libraries, community centres, adult education, cafes and parks.
4. To reduce inequalities, increase the tax thresholds above twice average earnings, returning progressively to the high percentage rates of tax for high income levels used up to the 1970s.
5. Also to reduce inequalities, taxing inheritance is essential, even though it is unpopular with the right wing newspapers. A decent social housing programme would ensure that family inheritances were not the only way to the next generation to find shelter. This tax is then redistributed to support work and wellbeing.
6. For manufacturing and goods, the circular economy of recycling another organisation’s ‘waste’ as a valuable raw material is key to sustainability, so more tax is needed from all raw materials which are extracted from the earth (such as oil, gas, minerals, coal, stone) to encourage the circular economy. Similarly for renewable energy sources. Our landfill sites and our oceans are brimming with rubbish, and tax policy is one way to help.
By using tax revenues to support the creation of new local economies we can avoid the danger of becoming dependent on needing to maintain sources of tax revenue which are themselves harmful and unsustainable.