Revision [96833]

This is an old revision of Economic Freedom made by nick on 2015-07-14 18:20:08.

 

Reform: 4-Pillars of the Liberal Awakening

iii) Economic Reform


Reasons for why change MUST happen:
  1. Complete Moral Collapse and Economic Failure of Banks and the financial sector in general
  1. Complete Failure of Government to anticipate the financial collapse, or to regulate financial sector.
  1. Vast government (tax payer) debt used to underwrite and bailout banks.
  1. Government created a debt mountain for the young generation to pay off so that the current middle age, middle class incumbents can maintain their lifestyle.
  1. Keynesianism & Monetarism don’t work: governments, central banks and economists think that they can control the economy, but in fact only create problems for the future.
  1. Politicians, Economists, and Civil Servants have be shown to be totally incapable of controlling or predict the world’s economy, and are victim to events.

Banking & Finance
  1. Get rid of the Bank of England.
  1. The self styled ‘Experts’ and should never again attempt to manipulate and control the economy or business.
  1. Interest rates to be determined by the market.
  1. Money Supply targets to be abolished.
  1. Split up High Street banks into town of regional lending banks to support industry: end up having thousands of independent banks.
  1. All banks pay into an Insurance Levy that will underwrite any bank failure.
  1. The taxpayer will NEVER underwrite banks again. All businesses - especially the banking and financial sector - should operate within the same parameters as all other capitalist business.
  1. All the financial sector will operate under the same ‘moral hazard’ as other businesses, and allowed to go into liquidation if they fail.
  1. Investors (including members of the public) should spread their risk between banks to avoid the possibility of loss. When investors know that they are not guaranteed to get their deposits back, then they will be more careful about spreading their risk.
  1. To avoid ever again the ‘too large to fail’ situation, retail banks will be broken up into very small local units, and be solely involved in lending to individuals and businesses.
  1. Riskier financial organisations such as Hedge Funds and investment banks will be be prevented from using money from traditional banks in any socially useless money trading schemes.
  1. The city of London financial sector to be re-modeled as having prime duty to invest in UK industry, business, and Education/Research sector.

Government Borrowing
  1. A new law will be brought in that forbids government from borrowing to pay for services (except in exceptional circumstances such as war).
  1. All annual spending will have to be met through equivalent revenue raised through excise and taxation.
  1. A commitment to pay off the total national debt in 25 years, thus creating a better and more prosperous society for the next generation.
  1. To meet this commitment, a surplus of revenue over spending will, therefore, have to occur every year.
  1. Government to average a 2% budget surplus on any 7 year period of expenditure.
  1. Deliberate deficit spending to be outlawed: protect the next generation.
  1. Government debt to be reduced to zero over 25 year period.
  1. Freed from having to pay debt interest, a bigger proportion of tax receipts can be used for paying for services (health, education etc)

Taxation
  1. Abolish Taxation on Company Profits (Corporation Tax):
    1. Companies shouldn’t be punished for being successful, but instead encouraged to re-invest their profits.
    1. However, the taxation on any profits moved out of the company - in the form of dividends etc. - will be more heavily taxed, at a rate starting at 45%.
    1. The socially useless Stock Exchange culture of rapid share transactions will be punitively taxed. Stocks and shares should only be bought as long term investments, and used as means for helping businesses to grow and expand.
    1. There will a sliding scale of taxation on stocks & shares capital gains depending on how long the shares have been held. This will encourage private equity organisations, hedge funds etc. to hold stock for several years, so that when they come to sell taxation rate will be far less.
    1. Traders who buy and sell shares within 48hours will be taxed at 98% on any capital gains.
    1. Increased tax on dividend payments to encourage companies to re-invest profits.
  1. Income Tax & National Insurance (NI)
    1. Abolish National Insurance for employees
      1. Merge with Income Tax to stop the distortions in contributions inherent in the current taxation system.
      1. Introduce honesty and simplicity by combining the two: stop the illusion that NI contributions somehow pay for people’s benefits, healthcare and pensions.
      1. Stop low-wage employees paying a 'stealth' tax below the income tax threshold.
      1. Raise the income tax threshold (before anyone starts paying tax).
    1. Abolish Employers National Insurance
      1. Currently a tax on employment: the labour intensive industries (who should be encouraged) are being punished.
      1. Changes to dividend taxation and minimum wage legislation will offset these taxes.
  1. Abolish VAT exemptions
    1. Currently this is a subsidy on well-off individuals (who buy children's clothes etc).
    1. make VAT a less complex tax and bring the UK in line with other nations.
    1. The effect on the low paid will be offset by changes to taxation thresholds, the abolition of NI, and minimum wage legislation.
  1. Abolish Council Tax
    1. Simplification of the tax system.
    1. All tax to be collected centrally and dispersed.
    1. A fairer way to collect taxes.
  1. Abolish ALL Housing Subsidies
    1. Schemes like Right-to-Buy merely push up the price of housing making it even more inaccessible for those its intended to help.
    1. Wastes tax payers money with no discernible benefit.
  1. Abolish ALL Tax Credits
    1. A state subsidy for employers.
    1. Distorts the labour market and allows employers to pay low wages.
    1. Raise Minimum Wage in line with the move to a high-wage high-skill society.
    1. Remove all personal taxation (ie. income tax and NI) below a salary of £12,000pa
  1. Abolish Pension Tax Relief
    1. Individuals to pay into their pension pot with taxed income.
    1. When they come to draw the pension they receive will not be taxed.
  1. Abolish ALL other Tax Reliefs
    1. This will stop the large scale tax avoidance schemes which deny the government billions in revenue for essential services.
    1. Reduce workload and cost of taxation authorities trying to collect taxes.
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