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Adam Smith Institute Blog:

Taxing times

By Dr Madsen Pirie in: Tax & Economy •

I had a piece in the Telegraph business section on Wednesday, comparing Gordon Brown's tax policy with the maxims set down by his illustrious fellow-countryman, Adam Smith. Smith had said that people should pay taxes in proportion to income, that they should be certain rather than arbitrary, that they should fall due when they could conveniently be paid, and that they shouldn't cost too much to administer. I suggested that few would give the Chancellor four marks out of four, given his stealth taxes and his steady tax increases.

Much of my article was of steps which could be taken to simplify taxes in Britain, starting with the harmonization of income tax and national insurance. I also suggested that capital taxes could be harmonized, and put in line with income tax as well as with each other, absorbing the much-disliked death tax. The complex system of tax credits put in place by the Chancellor could and perhaps should be replaced by a simpler negative income tax. Out could go all the tax exemptions, allowances and tax credits accumulated over the years like junk in a store-room.

Yes, Smith himself had harsh words for taxes on labour (income taxes et al):

"In all cases, a direct tax upon the wages of labour must, in the long run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from a proper assessment of a sum equal to the produce of the tax, [levied] partly upon the rent of land, and partly upon consumable comodities."

And similarly on capital taxes and profits. Yet he did favour one form of taxation more highly than any other:

"Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."

So why does the Adam Smith Institute continue to suggest tinkering with income and capital taxes to make them a little more fair, a little easier to collect, a little simpler to understand? Why not embrace Smith's idea, as developed by Henry George, in the "single tax". Get rid of most of these other taxes apart from perhaps behavioural taxes where there is a popular mandate to tinker with certain aspects of peoples' behaviour and instead insist that the only revenue a government can call on is the value of land within its borders.

It is simple, difficult to avoid - it doesn't matter whether you are domiciled here or not - if you own land you'll pay your tax or lose the land eventually - economically non-distorting, penalises a monopoly (anathema to the free markets AS and ASI espouse) and can set an absolute and market driven limit to the size of the state. A body like the Adam Smith Institute (seen as it is in many circles as a rabid right wing think tank) is in the ideal position to push the "Overton Window" on tax policy. So why is it so pedestrian and unimaginative on this, where their eponymous hero appeared much more certain? At least their counterpart in Australia is bolder (be prepared to turn your computer's sound down - the background music grates!)

Technorati Tags: Henry George, Adam Smith Institute, land value tax

UPDATE: I see that Dave's already poo-pooed this idea in a Q&A session with Telegraph readers . Is there going to be anything left of this report that will actually make it to party policy by the time it's released on Thursday?

In more of the drip, drip, drip of revelations from the Gummer-Goldsmith "Quality of Life" report the Telegraph today reports that the Tories are to end out-of-town free parking:

Tories to end out-of-town free parking
By Graeme Wilson, Political Correspondent

Shoppers using out-of-town supermarkets would be forced to pay car parking charges under new Conservative proposals to defend the traditional British high street.

Under the plans, councils would be given the power to demand that big supermarkets and other stores on the outskirts of towns charge their customers for parking.

Seeing blue over Tory plans
on out-of-town retail?
Originally uploaded by Alastair Montgomery

The proposals - which are contained in the party's quality of life policy review that will be published on Thursday - are likely to face a backlash from shoppers, who have grown accustomed to free parking at the out-of-town supermarkets and shopping complexes. The 800-page report tries to deflect the inevitable criticism by stressing that the parking charges would be no greater than the amount people would pay in the nearest town centre.

All well and good. Liberal Democrats should note that our own tax proposals already do this in effect. By substituting Site Value Rating (LVT by another name) for the National Non-Domestic Rate (Business Rates by another name) the land occupied by these car parks would become subject to a tax on their land value along with the stores.

This would end the huge benefit out of town stores have over their town centre competitors without the micro-management of the Tory plans to implement a similar thing by imposing parking charges. It would be difficult for them to pass on SVR to customers of their in-town stores because they are competing with in-town neighbours who would not have this added burden and would not have an increase in costs - indeed heir taxes may in fact fall by a little once out-of-town store car parks were also paying tax.

Of course everyone's allowed to change their mind, Keynes style, when the facts change, but looking back to 1997, I seem to remember that it was a Labour manifesto policy to stop the growth of out-of-0town retail (another one they signally failed to achieve of course) which had grown like topsy under the Tory government with their powerful retail backers such as Peter MacLaurin at Tesco, James Gulliver's Argyll Group, Archie Norman's ASDA and so on. Even some of Zac's own fortune is connected with out-of-town retail, when his old man sold Argyll Brands to James Gulliver whose Safeway went on to be an early adopter of the model.

The Oxford Mail today reports that a Second Councillor Quits Lib Dems:

Sajjad Malik has thrown Oxford City Council's ruling Liberal Democrat group into chaos after becoming the second councillor to quit the party in six weeks.

My first reaction on hearing the news yesterday is probably unprintable, but after seeing the Mail's report today and Malik's statement that:

"I don't owe them anything, they owe me everything I am the man who made them alive in East Oxford. They were dead and buried before I joined them.

...I nearly drowned on my morning mug of tea. The astounding arrogance of the man! But then that seems to be the way with defectors, in the main. The world seems to revolve around them in their smug self-important way. Malik should perhaps be reminded that before he arrived on the scene we had won his ward both at city and county levels (albeit with one defection of our own after we had started to win the ward in our own right) and had taken one of the two seats in the 2002 all out elections, and pretty well reckoned, by another Labour member opining to me, without reliance on any Asian vote that he might have brought with him.

On the other hand, this is also the man who schedules month long holidays in April - perhaps not realising that the campaigning teams that got him elected are at their busiest then. The man who so wanted to be a Lib Dem MP that he organises to go on a new candidate development course and then fails to turn up (wanting to be an MP whatever one's abilities is a sure sign to me of an overdeveloped ego - then not turning up is just downright rude and disrespectful!)

And then it seems his new friends' New Labour spin machine takes over, because what follows is just so much bollocks it could only be concocted by a committee of crowing colleagues:

"I have been shocked by the way in which the Lib Dem minority administration has quickly turned their back on the city council's commitment to build much needed affordable homes in an urban expansion and on the agreed scheme for recycling plastics and green waste. I believe these new Lib Dem policies do not represent the interests of the community in my ward and I will continue to oppose them strongly from within the Labour group."

Malik knew when he was elected, indeed when he joined the party (because I explained it to him) that we were against Labour's knee-jerk response to Oxford's housing shortages of just piling more new housing on the edge of Europe's biggest council estate. He has never, it appears, taken the trouble to try to understand how the party's policy on affordable housing, such as the Community Land Trust project I'm involved with, might address the same needs more sustainably.

Equally he will also have been as involved as he liked in discussions about why Labour's unilateral plan for extending recycling, which prompted many negative comments on the doorsteps in May, should be reviewed and properly consulted on before imposing what for many people seemed impractical on the householders of Oxford. If he didn't understand that point of view, perhaps he should have said something at the time to his colleagues.

These were part and parcel of the messages that made us gains in May and landed him in the administration group (the notable exception being his own ego-riven ward amidst the fiasco he helped to orchestrate). If he's so spineless as to have to run away from "infighting" instead of standing his ground (and after all, the first anyone knew about this was yesterday so he clearly hadn't taken the trouble to take his worries to colleagues), Labour are most welcome to him - again.

But the Mail concludes with perhaps a salutory lesson from previous Oxfordshire defectors, and ones who will be remembered long after Malik is just a footnote, that even the rich and famous ones seem not to be able to hold onto their seats for the party they defected to:

Nationally, Shaun Woodward was elected as a Conservative MP for Witney at the 1997 election, but later defected to Labour.

And in Wantage, former MP Robert Jackson switched to Labour before retiring at last year's General Election. The seat is now held by Tory MP Ed Vaizey.

In the longer run, Oxford's Liberal Democrats will, I am sure, be better off without such pompous-arsed hyper-inflated egos - there aren't many more to winkle out!

Technorati Tags: oxford, politics

Since this is about to become a full blown party debate in the Lib Dems, it might be worth highlighting that an online debate has begun today at the Economist.

...I know we do in Oxford, and I also notice that at least three of the surrounding councils use it, so I presume this is de facto the "market leader" in public access planning application systems on the web. At least at Oxford City, very little appears to have been done to the system since they implemented it six years ago - and that MAY be the council's fault for not upgrading or whatever. However I have two big issues with it that I would like as many councillors from as many authorities as possible to complain about in the hope that their authorities will start to pressure for these changes, one of which would be an enhancement but the other definitely a fix for a non-compliant system in my opinion.

1. It has never worked properly with any browser other than Internet Explorer. In particular, the mapping system does not work in Firefox (2 or 3) or Safari. It may load the first, whole borough map, but if you want to start zooming in to the site you want to look at it refuses to play. In my opinion whilst IE may be the most frequently used browser, it limits users to Windows operating systems now. It will not work properly on any other type of machine - Mac or Linux for example. If yours does work correctly, perhaps you could let me know so I can continue to nag Oxford City Council to get updates or whatever would be needed to get it working. As far as I am concerned by excluding anyone other than Windows users it does not comply at least with the spirit of e-Government.

2. RSS feeds please! At the moment the closest you can get to a regular list is a weekly application list by going through several pages of the site. Here in Oxford apparently they are planning on piloting an e-mail alert system which will necessarily involve people submitting yet more personal information to the council in order to get alerts, and it will no doubt be difficult to change the alert you want (it may for example simply mean sending out the weekly applications list for a ward or some such simple response).

RSS feeds would be far better. They can be made infinitely variable - some people might only want applications in a post code, others for telecoms masts only but borough wide, others for a ward or area committee bundle of several wards. All this should be possible with RSS feeds. Also, many councillors like to keep their constituents in touch by copying "long hand" the weekly list applicable to their ward onto their websites. RSS feeds would allow them to automate this tedious process. I myself am planning a non-council local website, ox2online.net, to complement the area's e-democracy forums and so on, and RSS feeds would be ideal.

So please, if you are reading this and work or are a councillor in any authority that uses this system for public access to planning applications, can you think about these and have a nag at your planning/IT/eDemocracy officers and see if we can't get these changes.

(Oxford City Council appears to be on "Version 7.4")