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And this time it's Pauline...

(Photo courtesy of bbc.co.uk)

Cherie .oO "I'll bet her's cost £7.70 with a tip at Betty's on the Beverley Road"

And, could we be assured that none of my UNISON dues went towards any hair-dos, either affiliated or general?

There was a flutter of interest in the Guardian and Times today (interesting to see the difference in emphasis) about some ideas being put forward to the Tories' Tax Commission by the Bow Group. The report in PDF format is available alongside this discussion on ConservativeHome. Not surprisingly, since the press release promoted this aspect in particular, discussion has focussed on what the author describes as "land value tax". But the report as a whole has a whole load in it, from raising income tax thresholds to £11,000 and imposing a flat rate tax of 38% on all earnings above that, to restricting pensions contributions relief to 38% but on just £4,400 worth of pensions contributions a year, from what I can work out. Go read it - it's interesting, considering we Lib Dems are also in the process of making tax policy.

However, despite all the furore over the "land value tax" proposal, it should be noted that it is not, in fact, a Land Value Tax, and it is certainly not intended to be a step towards Henry George's "Single Tax". A hard-core Georgist like myself of course could simplify even Mr Wadworth's attempt to simplify the gargantuan tax system into just one point - replace all other taxes with taxes on land and resource use! You pay for what you take, not what you make.

But in particular the Bow Group proposals are for a straightforward flat property tax, as Tim Worstall points out. That is fundamentally different from a Land Value Tax, in which only the value of a site is taxed, and not the value of any buildings or any other improvements built on that site.

The arguments Mark Wadsworth makes for efficient use of land are far less evident in a straightforward property tax on the whole combined value of land and buildings. It does nothing to actually encourage efficient development - improving a property will result in a higher tax bill as the whole value is taxed. With a Land Value Tax you can make the most efficient permitted use of land without affecting the tax liability of the whole site. One house might pay £20,000 a year on the same site as ten flats each paying £1,000 a year for example.

But the document covers a whole lot more than this that would have been eminently worth reporting - the flat tax of 38%, the raising of thresholds to £11,000, changes to child benefit, pensions provision and many others. I welcome the fact that the Bow Group chose to promote the discussion on property taxes, I think, and if they want a proper LVT will help in whatever way I can, but it's not currently based on Henry George's/David Ricardo's ideas on economic rent and cannot properly be called a Land Value Tax.

Technorati Tags: conservatives, land value tax, politics, property tax, tax shifting, taxation, tories

...but the Tories are possibly in the best position to do it, if they dare.

Much has been made of David Cameron's attempts to persuade us that a vote for the Tories is the real environmental vote for Britain. And whilst I will suspend judgement personally until I see policies defined, because I do fancy that old fashioned small "c" conservatism can be very environmentally sustainable, I have yet to hear him propose any of the sort of change that I believe can only truly create a sustainable world.

And nor am I saying that any of the mainstream political parties, including my own Liberal Democrats and including the Green Party, are actually any better, yet.

For it's no good just going on about whether or not your have a better recycling rate in your councils, or whether to charge more for Chelsea tractors and air travel, or to plant more trees, or whether you cycle to the Commons or not. These are merely addressing the symptoms of an economic system that forces us into a never ending search for economic growth in order primarily to pay off the debt on which our economies rely for financial liquidity - money.

And it is this debt based growth imperative that creates most of the traffic on our roads, the need to get goods around the world in double quick time, goods that are of lower quality and shorter shelf-life time in order that we have to go out and buy another one (and dispose of a previous one).

It goes further, into deeper seated problems that we are also struggling with that are not traditionally seen as "environmental" issues: - it is the reason why we will have to work longer and harder, in an era when more and more work could be done mechanically, just to be able to enjoy a few years of retirement. It creates the need for economic 'warfare' between countries. It gives far too much power to governments, because they can deliberately maintain a shortage of resources and therefore the power to allocate to one group or another depending on political expediency. It keeps poor countries dependent on the largesse of richer ones. And it gives the opportunity for Bono and Bob to make waves with "Drop the Debt" campaigns that will never quite hit the root of the problem!

It is, in short, why despite good economic growth, certainly in the northern, "wealthy" world, we can be financially richer generation on generation and yet not significantly happier.

And to resolve it would be to enable a culture of "sustainable abundance", in which truly "free" trade is better able to disperse a more even distribution of the world's wealth and the benefits that go with participating in that would bring.

We already know some of the factors that we need to manage - we give the Bank of England strict inflation targets, we know we must keep a close eye on the money supply, yet the very way we do the latter leads to the former. We keep "real" money, money created for nothing, pledged only on the credit of the people, at a minimum - there are only £40 billion or so pounds in existence in an economy that uses over thirty times that amount to account for its national product. All the rest is created, entirely privately, with only base rates to moderate how much and how fast, by the commercial banks. And instead of it being created for a single one off cost of producing it as is the case with cash, we pay for it every day it exists, in interest payments.

Look at it this way: if you borrow a million pounds at five percent for a couple of years in order to get a new product off the ground, you'll maybe use that to buy raw materials, to pay wages and so on. But in order just to break even you have to sell your product for at least £1.1 million. In this very simple economy, you can't pay your workforce and those of the raw material suppliers even enough to buy your production. So more money is needed in the system. And guess where that comes from - yes, more debt.

Yet the answer is, as J K Glabraith put it "so simple it repels the mind". Create the money not as debt, but free - even "production" costs of money are minimal when most of it only ever exists as electronic entries in different bank accounts - against the credit of the economy that's producing the goods it needs to buy and sell. You end up, over time, with a truly stable money supply. One in which people and business do not have to produce ever more every year just in order to finance the ability to purchase what is already created.

And for the party that grasps this comes the promise of a manifesto that reads like Monty Python's "Blue Peter" sketch - you know, the ability to cure all known diseases - in this case of the economy. We can lower your tax bill, give you more time to enjoy the benefits of the technological revolutions that have boosted growth over the past couple of centuries and never, it seems, faster than now. A fairer world. A freer world. Sustainable abundance.

Until then, all the "green" policies I've ever heard are merely tinkering around the edges of a problem that is purely of human, intellectual, creation - for that's what economic theories and systems are. They're not fixed, immutable laws as if of nature, but ways of trying to describe how human society works and distributes resources. If one isn't working, it can be tweaked or swapped for another.

The Tories have a history of taking the once crack pot ideas of at the time "dissident" economists like Friedman and Hayek and persuading people and business that they are the next big thing. If they can grasp the solution this time, they could make the running. And as the party traditionally of "big business" they could be in a position to persuade the right people to accept this one. I won't be holding my breath though, but if someone doesn't grasp it, and soon, I reckon we're in for a hard, destructive century that the planet will be hard pressed to survive.

...would ever have invented the shirt button!

Blasted things!

...or the lace up shoe (memo to self: get pair of slip ons quick!)

I find the story of Farepack's collapse heart-rending. Whilst I'm none too fond of the notion that Christmas is something that should put such a burden on families that they feel they have to save up for a whole year to give their families a decent time (I believe a decent time should depend on the people and the spirit of the festival not the material goods that go with it) those who have chosen a savings scheme, rather than a spend-now-pay-afterwards credit card Christmas, have been doing the really responsible thing. And they've been left completely in the lurch.

Not only that but Farepack also allowed people to become their "agents" and collect from friends and other family members, so there's bound to be a bit of resentment in some households.

Presumably Farepack would have to have been a licensed deposit taker? And regulated as such by the Financial Services Authority? Their collapse should I hope, be dealt with as firmly by those authorities as any - Barlow Clowes springs to mind. I know running a business can be a fine balance between keeping the confidence of your customers and dealing with what might have seemed at the time - in June or July when they knew they had some cash flow issues - like little mid-year difficulties that they were confident they could get over. But it's not as if we are talking about sophisticated investors here who might have been watching for signs of trouble, just people paying into a relatively simple conceptually savings scheme that would guarantee them some fun over Christmas.

So it seems to me that HBOS do have some responsibility here. They were issuing warnings months ago to Farepack, and must have known the nature of their business and their customers. To allow it to go on till mid-October, when there's really little chance of people being able either to get what payout from an insolvency they might end up with before it was needed for Christmas or rustling up the same amount of money to replace what they had paid in and now lost, seems almost callous.

Farepack and similar schemes started life seventy and more years ago as mutual savings schemes. Maybe they've got too big to have the kind of care about their customers and the local savings club did of its members. Would that we had more credit unions that conscientious savers could have used instead. After all, how difficult can it be - you collect money over a year, put it all on deposit, even make a little interest for the members in doing so, and then all club together and go shopping in bulk, and start again the following January.

I hope someone steps in and offers these hapless but responsible people some material comfort at what promises to be a pretty miserable time of year for them.