As far as public revenue is concerned, existing taxes are also becoming less viable. For example:
• National economies in a competitive global economy have to reduce taxes on incomes, profits and capital to attract investment capital and highly qualified people - both being increasingly mobile.
• Ageing societies will be unable to support growing numbers of "economically inactive" people by taxing the work and enterprise of fewer people of working age.
• Internet trading is making it more difficult for governments to collect customs duties, value added tax and other taxes and levies on sales, and easier for companies and rich individuals to shift earnings and profits to low-tax regimes and tax havens.
• Tax avoidance by big corporations and rich individuals is reaching crisis proportions. Estimates are that tax havens cost £255bn annually to governments worldwide, and hold assets of $11.5 trillion ($11,500bn), causing serious distortion of economic priorities and supporting criminal money laundering.
Shifting a large part of the tax burden on to the value of land and other common resources which cannot be moved abroad will probably be national governments' most effective response to these problems.
As well as becoming less viable, existing patterns of taxation are now positively perverse:
• By heavily taxing employment and rewards for work and enterprise and lightly taxing the use of common resources, they systematically encourage inefficiency in all kinds of resource use - under-use and under-development of human resources, and over-use of natural resources (including energy and the environment's capacity to absorb pollution, including carbon emissions); and
• By taxing the value added by most people's positive contributions to society (VAT), and failing to tax value subtracted by those who make most profit from common resources, they systematically skew the overall burden of tax in favour of a rich minority.
These facts argue, on both economic and ethical grounds, for a "tax shift" on to the use of, or profits from, the value of common resources.
Common resources are resources whose value is due to nature and to the activities and demands of society as a whole, and not to the efforts or skill of individual people or organisations. The site value of land is the most obvious example. The value of a particular land-site, excluding the value of what has been built on it, is almost wholly due to the activities and plans of society around it. For example, in the UK when the route of the London Underground Jubilee Line was published, properties along the route jumped in value. Access to them was going to be much improved. A public policy decision and subsequent investment of public money, gave owners of those properties a £13bn windfall financial gain. They had done nothing for it; they had paid nothing for it; they had been given a very large free lunch. By contrast, the UK Treasury raised £22.5bn for UK taxpayers in 2000 by auctioning twenty-year licences to use the radio spectrum for the third generation of mobile phones. The governments of other European countries also raised significant sums that way.
Local government in the UK, including the Greater London Authority, has been exploring whether rail and road transport developments could be financed out of the increases in property values which they generate. In 2004, the Vice Chair of Transport for London summarised some of the arguments for land value taxation:
"With income from LVT … the government could provide new public transport infrastructure; abolish economically damaging property taxes such as council tax, business rates and stamp duty; raise personal allowances so that millions of lower-paid workers pay no income tax at all; and reduce VAT rates to help consumers and businesses. The tax would improve earned incomes; cut the cost of tax collection; provide affordable homes; reduce urban sprawl; avoid property-led business booms and slumps; and minimise the need for constant changes in interest rates to control land prices"
Pressures for a shift to environmental taxation have recently risen along with awareness of global warming and other threats too - including world shortages of energy, food and drinkable water, and worsening pollution of the oceans.
In addition to land-sites, the electro-magnetic spectrum, the national money supply, and the environment's capacity to absorb pollution and wastes, important common resources include: the value of unextracted energy; limited space available for road traffic, airport landing slots, etc; and water for extraction, for fishing and for waterborne transport. The annual value of these and other common resources is very great, and rises along with the world's economic growth.
The overall structure of public spending programmes needs more searching scrutiny by politicians, the media and the public than it now gets. Two examples illustrate this. First, $1.5 to $2 trillion a year is estimated to be spent worldwide on perverse subsidies which encourage economically, socially and environmentally damaging activities (Myers, 1998). These include the subsidies from rich-country governments to their farming and agricultural sectors, which - combined with tariffs against imported food - devastate those sectors in poorer countries and expose the hypocrisy of rich-country support for free trade. But there are many other examples of perverse subsidies. Sustained national and international determination is needed to reduce them year by year.
Second, support for a basic income (or Citizen’s Income) continues to grow, especially in Europe but elsewhere too. It would be paid to all citizens as of right, out of public revenue. It would include state pensions and child allowances, it would replace many other existing social benefits, and it would eliminate almost all tax allowances, tax reliefs and tax credits. It would recognise that, in a society of responsible citizens, some of the public revenue arising from the value of common resources should be shared directly among them. Politicians and government officials now channel huge sums in contracts and subsidies to private-sector business and finance, as well as to governmental organisations, to provide citizens with public services. Much of that public money could be given directly to citizens to spend for themselves in a market economy made more responsive to their needs by the other reforms proposed. It would especially help poor people who would not benefit from reductions in income tax but would have pay the new environmental taxes.
The state should carry out its three main operational monetary and financial responsibilities in ways that will distribute the value of common resources among all citizens and reduce or even abolish taxes on earnings and profits from providing useful goods and services. This will create a new framework of prices which reward the market economy for delivering outcomes which combine economic efficiency with social justice and environmental care. The state will then be able to let the market economy operate more freely, with less intervention, than now.
Business people and everyone else too, as citizens, will experience greater freedom at the personal level. A Citizen's Income will allow them, if they wish to do so, to reduce the amount of money they must earn by working as employees. Then, with more time and energy to supply themselves and their families with some of the goods and services they now have to buy, they will be able to further reduce their need to spend money if they want to. As consumers, employees and savers they will be in a stronger position to influence - and choose between - the people they have to deal with in those capacities.
Overall, attention will shift to creating well-being for people and the Earth; to enabling people to develop their capability, rather than reinforcing their dependency; and to conserving the Earth, rather than transforming its resources as rapidly as possible into money. The fairer sharing of the value of common resources will help to decentralise power and wealth - both by giving a fairer deal to people in their own places and by requiring rich and powerful people and corporations and nations to bear their full share of the environmental and social costs of centralisation. The new framework of monetary and financial incentives will automatically harness self-interest to common interest within and between nations.
Together such reforms offer the prospect of the democratic state performing its monetary and financial functions more purposefully and effectively, thereby being able to allow the market economy to operate more freely. They will also make it financially easier for people to reduce their present degree of dependence on goods and services and jobs provided by big corporations and the state, and for both people and organisations to act in ways that conserve, not squander, natural resources ..."
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Robertson's excellent article goes on to look at this on an international level too (and I would recommend reading it in its entirety). Expanding upon this we clearly need to look at the barriers to such reforms ... including the vested interests and misuse of Power by the small minority in Power and quietly wielding Power (i.e. 'the Invisible Hand').
The current 'economic system' is designed to ensure the small minority in power 'profiteer' heavily from it, whilst adding no value themselves and at the expense of everyone else (i.e. Poweromics) ... and they will wield all of their power to resist any changes to this.
For instance Governments (including the UK) are in the 'hands' of these people, either through infiltration (i.e. they are also part of this small 'elite' group), conspiracy (nb the current Conservative party gets the majority of its funding from this group), or by way of threat (e.g. due to indebtedness and/or by threats by this small group to move their accumulated wealth/ support elsewhere).
However Ignorance and Apathy are also to blame ... as those misusing Power will continue to do so for their own self-interest and gain ... until more and more people realise what's going on and start to demand change! ... and it is at this point people will start to see how the media, political and judicial systems are also designed to support this small minority too!