Thursday, June 17, 2004

Land and Tax reform.

Taxation is a complex and time consuming business where the criminal and rich avoid it, the poor benefit from it but the middle classes have to pay it.

Income tax, VAT, capital gains. Messy - especially VAT if you are a small business about to become VAT-liable.

If the main tax we have is on land then much is simplified. Land tax is hard to avoid. People can choose how much exposure to it they encounter by making choices as to how they live. Low rise or high rise. Large country estate or studio flat.

It encourages sensible land use, as people will build up to cut costs in high tax areas such as city centres. Renters pay their dues as the landlord will onpass the tax to them - the demand for share of freehold property will keep a lid on avaricous private landlords.

VAT will not exist as a form of revenue collection. This frees small businesses and the state from the wasteful administration. It means there is no such thing as the 'black' economy operating outside of the VAT system.

No income tax will remove the administration. People are taxed on where they live, not what they earn. Typically, higher earners spend more on their accomodation and in a better area and this will continue to be so, but people have the choice to save more and live frugally.

Local authority tax will operate as a percentage of the land tax, set by the relevent authorities.

This system does not tax consumption, so encouraging a free and open economy. It has a very lean administration overhead, thus allowing for small government.

Landowners can defer their taxation burdens over time in cases of temporary hardship. Such a length of time will be phased in and would be limited to ensure cash flow for the state. As land is an asset, when sold any outstanding tax shall be paid at that time.

Land will have different tarriffs depending on zoning and use.

As the UK will become virtually tax-free for tourist spending, it should attract trade and commerce from Europe.

Special duties on fuel, alcohol, tabacco and other luxury goods such as cars will remain.


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