Revision [97397]

This is an old revision of Economic Freedom made by nick on 2015-08-01 10:44:58.


Reform: 4-Pillars of the Liberal Awakening

iii) Economic Reform

Banking & Finance
  1. The taxpayer will NEVER again underwrite banks. 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. Retail Banking:
    1. To avoid ever again the too large to fail situation, retail banks will be broken up into very small local units consisting of town or regional lending banks.
    1. Their sole function will be to look after depositors money, lend to individuals, and invest to support industry.
    1. End up having thousands of independent banks.
    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. Investment Banking:
    1. Investment Banks and all other non-deposit financial operations will be completely separated from the retail sector.
    1. All these financial institutions will pay into an Insurance Levy that will underwrite any future failure.
    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.
  1. Central Banking:
    1. Initially reduce the role of Central Banks solely to Lender of Last Resort.
    1. Interest rate decisions to be determined less by the authorities and more by the market (treasury bill rates etc)..
    1. Long term discussion about the possibilities of abolishing all central banks.
    1. Money Supply targets to be abolished.

Government Revenue & 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 starting rate equivalent to the highest rate of income tax/NI combined.
  1. Socially Useless financial transactions to be punitively taxed.
    1. The 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 95% on any capital gains.
  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 PAYE
      1. A major cost saving for small business
      1. Personal responsibility of all citizens to pay their taxes, and become more personally involved in society.
      1. Businesses will inform the taxation authorities of salaries paid.
    1. Tax Avoidance, including Cash-in-Hand
      1. Very severe punishments - including asset seizure - for any citizens who don't keep their end of the bargain.
      1. Also, severe punishments for those who pay Cash-in-Hand to tax avoiders: a receipt must be obtained for all work, otherwise the assumption will be that they knowingly indulged in an illegal and immoral transaction.
  1. Tax Credits
    1. Too often a state subsidy for employers: Tax Credits have created a 'Dependency' culture among employers that distorts the labour market and allows employers to pay low wages.
    1. Need to move to a high wage & high skill economy whereby no one in full time work needs subsidising by the state.
    1. The Minimum Wage will be raised in line with the move to this high-wage high-skill society.
    1. Remove all personal taxation (ie. income tax and NI) below a salary of 75% of average annual salary.
    1. A more generous regime of Tax credits will replace Child Benefit and State Pensions.
  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 MOST Capital Gains Exemptions:
    1. Including Gifts, Private Residencies (see below), cars, personal possessions etc.
    1. Exclude gifts between husband and wife or registered civil partners, and charitable donations.
  1. Abolish Inheritance Tax
    1. All gifts (including private residencies) to be subject to normal Capital Gains tax rules (see above).
    1. Trust Funds to be made illegal.
  1. Housing
    1. Abolish Council Tax.
      1. Simplification of the tax system.
      1. All local expenditure to be financed centrally.
      1. VAT to be charged on Rental & Mortgage repayments.
    1. Abolish Stamp Duty.
      1. Another unnecessary & cumbersome layer of taxation.
      1. VAT to be charged on House Sales.
    1. Homes are for living in NOT as investments, so:
      1. Capital Gains Tax to be charged on ALL House Sales.
      1. Residencies unoccupied by the owners for more than 7 months per annum (including 2nd homes) will be subject to a special Non-Residency annual tax equivalent to 10% of the properties value.
      1. Properties being Let for more 11 months per annum will be exempt from the tax unless it is subsidised: in which case rental income will incur the same Non-Residency tax on a sliding scale.
    1. Abolish ALL Housing Subsidies
      1. Schemes like Right-to-Buy merely inflate the price of housing, making it even more inaccessible for those it's intended to help.
      1. Wastes tax payers money with no discernible benefit.
    1. Housing shortages and prices will also be moderated by setting population targets: the UK is already over-crowded, and getting all UK citizens into well paid skilled work will mitigate the need for mass immigration.
  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 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.
  1. BBC licence fee to be cut by 75%:
    1. Emphasis on high quality and innovative programming and journalism. No more sports events, etc. that commercial stations cover.
    1. If individuals are interested in watching sports (inc. Wimbledon) then they should go via Pay-TV and NOT expect the rest of the population to subsidise them.
  1. Museum Charges:
    1. Currently Free museum entry is a subsidy for foreign citizens.
    1. ALL museums to charge.
    1. Children, Students & UK Citizens to have FREE access (via a new Museum Pass).

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).
  1. Interventionist policies such as Keynesian economic Pump-priming, Monetarist money supply targets, and Quantitative Easing (ie. printing money) will be abolished.
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