The first of a new regular series of AGR commentaries from economist Fred Harrison of the Land Research Trust, designed by SLRG’s Ian Kirkwood, in which the interests of the peoples of the British Isles are at last placed centre stage.
When political power was devolved to Scotland, Wales and Northern Ireland,
the politicians in Westminster failed to re-base tax policies in ways that would equalise people’s life chances across the UK. The Brexit crisis provides the opportunity for regional authorities to renegotiate the fiscal settlement.
A new language that favours inclusive justice must replace the old concepts that were designed to divide and rule. The adversarial language was used by Scotland’s finance secretary Derek Mackay when he informed the Financial Times this week that he could impose higher tax rates on the “richest” people (but not yet). Words like rich and wealth are toxic tools that distort public policy. They disguise the streams of income that ought to be taxed.
Some people get rich by working hard: they add value to people’s well-being,
and they are rewarded accordingly.
Others get rich without adding to anyone’s well-being. This activity is pure rent-seeking, the legacy of an obsolete parliamentary politics.
Why treat these two groups as identical for revenue purposes?
Under the fiscal philosophy that prevails in Westminster, London and the South-east will always fare better than people in other regions. Now is the time for all representative institutions to engage in discussion on how to revise the flow of revenue into the public’s purses to achieve equitable outcomes across the four nations of the UK.
Q. How would the North-South Divide be healed with Annual Ground Rent/Land Value Tax?
A. By collecting and distributing the returns (growing site values – biggest at the economic centre) on taxes invested in amenities by EVERYONE.
A proportional distribution of returns on taxes invested in amenities by the UK regions (including Scotland) would have made the UK Idea a union of equals. Prosperity produced by working together would have been shared.
Instead we have endemic and accelerating inequality: those socially-produced returns go to UK site owners, engendering a community of landlords fattened on unearned wealth (extracted from its producers).
Government failure to collect the AGR/LVT we all produce causes the rabid land speculation at the root of the housing crisis. Public services are starved whilst landlords celebrate. Renters of homes become their indentured servants for life. Communities at the margin decay: businesses there cannot afford the landlords’ replacement taxes on wages and trade. They are destroyed. Employment is gone and citizens there must die on average up to 20 years early.
In Brussels Blitz or £500bn Dividend Fred Harrison and Ian Kirkwood discuss how post-Brexit Britain could flourish as never before.
For 300 years the four nations of the United Kingdom laboured under a tax regime which imposed an artificial ceiling on ceiling on productivity. Those taxes continue to create havoc in people’s lives.
The only viable strategy for the UK is a fiscal reform-led programme that organically restructures the economy to replace rent-seeking with value-adding enterprise. This would re-balance relationships between the regions by eliminating the bias that now favours London. And it would transform the City of London to secure prosperity across the kingdom.
A national conversation is needed to create the democratic mandate that authorises the re-design of the public’s finances. And the leaders of all political parties must agree to work together to eliminate the internal barriers that rupture people’s health and wealth.
The annual damage caused by the tax regime amounts to at least £500bn. The palliative policies that are supposed to mitigate that damage have failed.
Twice in the 20th century the people of Britain mandated the structural reform of their finances. Twice the law was enacted. Twice, Parliament failed to honour the “rule of law”. Will Parliament now grasp the opportunity offered by Brexit to unite the nation in a new kind of prosperity?
Not long now till SLRG’s Professor Roger Sandilands addresses Scot Gov economists and employees (19 October) on Henry George and Annual Ground Rent/Land Value Tax.
It is the one subject we all need to get our heads around if we want something we certainly don’t have now: a boosted economy that shares prosperity.
Good luck Roger!
Imagine a Scotland in which buying ‘property’ meant you didn’t pay for the site up front.
Just for the building and for transferring the deed.
Instead you’d pay the annual rental value of the site to the state in place of current taxes on wages and trade (which repress enterprise and reduce Scotland’s wealth) and Council charges.
Scotland would simply be collecting the stream of wealth we all produce together. This social wealth is today allocated to site owners who receive it as unearned income for doing nothing. That the rest of us get none explains social dislocation and unequal life chances across Scotland.
Worse, the sum is over half the gross income of Scotland: its absence from the public purse explains our starved public services.
Thinking a little further, the range of site rental values from the economic centre to the periphery builds automatic progressivity into AGR/LVT, permitting life and work to exist again at the margin.
For those intent on addressing Scotland’s housing crisis, starved public services, land speculation and banking, personal and government debt, premature deaths by zone, depopulation, cyclical recessions and perpetual deficits, AGR/LVT is where to look for the solutions.
Scot Gov, one of the 50 actions you promised in 2016 was to “place a new duty on public bodies to consider the impact their decisions could have on poverty and disadvantage.”
Scot Gov, are you a public body?
If so, why are you choosing to persist with Income Tax, inflicting deadweight losses on Scots to the tune of at least £12bn a year, when there is an alternative source of revenue (AGR/LVT) which inflicts none?
You are choosing to sustain and increase AVOIDABLE poverty and disadvantage for Scots in blatant disregard of the fine words penned in your Fairer Scotland Action Plan.
SLRG publication by Duncan Pickard in which he discusses the favourable economic and social outcomes of adopting a radically different state revenue structure: AGR/LVT.
View or download the publication here: Radical Tax Reform.web