28 August 2008

Green Taxes - How to Completely Miss the Point

The TaxPayers' Alliance have released a report called "The Burden of Green Taxes," in which they claim that green taxes are too high, on the basis that the taxes are much higher than are required to cover the social cost of carbon emissions. The report goes on to claim that high green taxes harm the competitiveness of the UK, encourage companies to move overseas and potentially cause jobs losses. The final conclusion is that green taxes should be frozen or cut.


I have to admit that I took an instant dislike to the TaxPayers' Alliance, purely because of the name; nothing is guaranteed to irritate me more than people claiming to speak on behalf of others, especially a group as disparate at "Taxpayers," which is pretty much everyone. Having said that, their main mission is to reduce government expenditure, which is something I generally agree with, so I think I approached the report with a fairly open mind. Having picked my way through it, I would describe it as 79 pages of detailed analysis with a completely erroneous conclusion.


The first point to consider is that carbon emission is only one of the externalities of fossil fuel use. Driving, for example, causes congestion and air pollution too. The report does acknowledge those externalities, but dismisses them as not warranting pricing, thereby implying that polluting the air is not something which should place a cost on the polluter.


Even if you put that aside and take all the calculations at face value, accepting the idea that green taxes are too high because they exceed the costs of the externalities relies on the reader ignoring the fact that most other taxes are levied on activities which have no direct externalities. If you apply the TPA's reasoning to taxes such as income tax and VAT, it implies that they should be zero, as that is the cost of their externalities.


Now, if that was what they were suggesting, with a move towards public revenue being raised purely from green taxes set at the level of the externalities, along with a land value tax, I'd be all for it. As a geo-libertarian, that would be my ideal system, on the basis that it would only charge people for doing things which have a negative impact on others. Unfortunately that isn't what the TPA is proposing. If they were, they'd be defending green taxes and calling for income tax to be phased out, rather than pushing in the opposite direction, by attacking green taxes while waxing lyrical about the idea of a flat income tax.


To me, the argument that we should levy less tax on activities which have negative effects on other people just doesn't make sense when we're still levying taxes on activities which have no negative effects on others.


The idea that green taxes are bad for business is erroneous too. When you tax something you discourage it, so a tax on pollution does certainly discourage polluting businesses from operating in the UK, but, by the same token, income tax, as a tax on earnings, discourages labour intensive businesses from operating in the UK and a tax on profits discourages profitable business from operating in the UK. When looked at as a complete picture, it becomes obvious that if the government wants to raise a certain amount of tax without reducing the benefits gained from businesses, it makes sense to raise it by taxing and discouraging pollution, rather than taxing and discouraging jobs and profits.


If there were no income tax or VAT then the the time would be right to debate the pros and cons of reducing green taxes, but until then, the TPA is attacking the wrong target.


Copyright © 2008 Paul Lockett (paul-lockett.co.uk). Verbatim copying and distribution of this entire article are permitted worldwide, without royalty, in any medium, provided this copyright notice is preserved.

26 August 2008

The Manifesto

As a fair part of my blog involves criticising other people's political opinions, I thought it was only fair to put myself in a position where my own opinions are open to scrutiny. The best way I could think of doing that was to produce a personal manifesto. I've taken some inspiration from a few sources, such as Fred Foldvary's outline geo-libertarian constitution and bill of rights[1] and the free earth manifesto from earthfreedom.net [2], which both have a similar basis to mine, but reach different conclusions in a number of areas. I view this as a work in progress, so if anything new occurs to me, or somebody points out something I've not considered, I'll revise the document.



THE MANIFESTO

This manifesto is built on the belief that all people should have the right to use their own bodies and the material fruits of their labour as they wish, but the natural environment should be treated as a common good to which everybody has an equal right.

INDIVIDUAL RIGHTS
  • Personal Sovereignty.
    Adults should be free to use their own bodies, minds and property as they see fit, so long as they do not infringe the rights of others by using or threatening to use force or fraud, or place others in immediate danger. Compulsory medication, including the addition of a substance to a public water supply for medical purposes, should be prohibited. The government should not be permitted to retain fingerprints, DNA samples or other bodily samples from citizens unless they have been convicted of a serious crime.

  • Freedom of Association.
    Consenting adults should be free to choose who they associate and trade with, including the freedom to enter into any form of sexual relationship, so long as they do not violate the rights of others. The judiciary of a community should act to adjudicate on and enforce an agreement freely and knowingly entered into by adults, at the request of any one of the participants. The participant found in favour of should have the right to have their reasonable legal costs paid by the other participant. A contract which contains terms which violate inalienable rights, such as a contract to enter into slavery, should not be enforceable.

  • Freedom of Expression.
    Every person should have the right of free expression. Legal penalties for harm caused by expression should only be permitted in the cases of false statements which defame a person or place others in immediate verifiable danger (in both cases, where the person making the statement knew it was false or showed reckless disregard of whether or not the statement was false), perjury and fraud..

  • Freedom of Movement.
    People should be free to move goods, services and themselves across borders, with the only permissible restrictions being the pricing of any externalities imposed across those borders and the requirement that migrants do not violate the rights of those residing in the community they are entering.

  • Self-Defence.
    People should be free to defend themselves and their property, so long as they use no greater force than is reasonable to prevent or minimise the harm caused by the initial threat. People should also be free to offer such defence to others.

  • Criminal Justice.
    Those accused of a crime should be presumed innocent, be informed of the charges against them, have access to a solicitor, be able to examine the evidence against them, have the right to silence and have a fair, speedy public trial by an impartial jury, chosen at random from the electoral register, with the right to acquit through jury nullification. Those accused should only be convicted if their guilt has been demonstrated beyond reasonable doubt. Nobody should be charged with an offence which was not a crime at the time the act was committed, or face a more severe sentence than was applicable at the time the offence was committed. Anybody who is detained against their will should have the right of habeas corpus. Penalties for criminal acts should be proportionate to the harm caused. The removal or damaging of a body part as a penalty for a crime should be prohibited. Capital punishment should be prohibited.

  • Children.
    Parents and guardians should have the right to raise their children as they see fit unless they abuse, neglect, or recklessly endanger their children. Neglect includes a failure to provide shelter, nutrition, medical care and a sufficient level of education to enable the child to become an informed adult capable of critical thought.

  • Copyright.
    Ideally, communities should not grant monopoly rights over artistic and literary works beyond those which the producer is able to achieve through ordinary contract laws. If communities do grant monopoly rights to producers of artistic and literary works, those rights should not prevent anybody reusing the work if the use is non-commercial, does not misrepresent the original work in a defamatory way and the original source is stated. These rights should only be granted for a limited time period (no greater than the average human lifespan) specified in law at the time of publication. It should be forbidden to retrospectively increase the period of copyright protection. Copyright should not be granted on works where technological measures or contractual terms have been applied to the work which are intend to, or have the effect of, imposing more severe restrictions on the user than would be applicable under copyright law. When copyright expires, the work should fall into the public domain.

  • Patents.
    Ideally, communities should not grant monopoly rights over inventions beyond those which the inventor is able to achieve through ordinary contract laws. If communities do grant monopoly rights over inventions, they should be for a maximum period of twenty years, with a tax levied on the patent as a fixed percentage of the holder's assessment of the value of the patent, with the percentage being set at a level which collects the majority of the value of the patent. The holder should be obliged to sell if anybody offers to meet their valuation. The holder should be free to increase their valuation at any time, but never reduce it. At any point, the holder should be free to cancel the patent and put the invention into the public domain. It should be forbidden to retrospectively increase the length of a patent. When a patent expires, the invention should fall into the public domain.

  • Trademarks.
    Communities should be able to grant monopoly rights to use distinctive words or logos to indicate that products have come from a specific producer or region, or meet a certain standard.

THE NATURAL COMMONS
  • Natural Resources.
    Natural resources are those items, other than humans, which have not been made, cultivated or extracted by people and include underground minerals, ores and oil, wildlife, naturally occurring forests and plants, the air, rivers, lakes, seas, rain, sunlight, the electromagnetic spectrum and the surface area of the Earth. As natural resources are not the product of human effort, they should be considered common property.

  • The Value of the Commons.
    Each member of the community should be viewed as having an equal claim on the economic value of the commons, which in turn provides a mechanism for the just and open protection of the commons. In a situation where over-use of the commons endangers its continued viability (such as over-fishing), the community should be able to control the over-use by a permit/quota system, with the permits being leased at market value.

  • Animals.
    People should not be permitted to inflict intentional cruelty on sentient beings.

  • Resource Extraction and Pollution.
    The community should collect the market value of finite natural resources (such as minerals and oil) extracted from a community commons.

  • Pollution.
    A community should be able to charge a fee for polluting a community commons, such as a duty on fossil fuels burnt in the area.

  • Geographically Fixed Natural Resources.
    A natural resource which is a geographically fixed and is not reduced by use, such as land, the broadcast spectrum and the atmosphere, should be treated as unowned property to which all have an equal right and not sold in perpetuity, although this should not prevent people having secure possession of land in perpetuity.

  • Land Rent.
    The unimproved value of land, should be collected by the community as land rent (likewise for other geographically fixed natural resources) when exclusive use is being made of the resource. In this context, exclusive use means any situation other than one where all members of the community have the same rights to access, control and use the resource. As the unimproved value of land is created by the location of land, the community around it, the public services provided and planning permissions or restrictions on land, this captures the community created value of a common good for the benefit of the community. The rental price should not be set for a period longer than 10 years. If there are practical difficulties in determining the market value of a given resource with complete accuracy, the charge should be set at a level which, as a minimum, collects the majority of the value of that resource.

  • Resource Valuation.
    The value of those resources for which rent is charged should be determined by one of the following methods:
    - Periodic auctioning.
    - Self-assessment by the holder, with the holder being obliged to sell if anybody offers to pay their valuation.
    - Centralised assessment based on market data, with each landholder having the option to use self-assessment if they are unhappy with the valuation.

  • Other Taxes and Charges.
    As placing a charge on land (and spectrum, etc.) cannot reduce its supply, the collection of the unimproved rental value of fixed quantity natural resources does not cause economic distortions or inefficiency. In contrast, traditional taxes on income, sales and man-made wealth create economic distortions and effectively confiscate the legitimate wealth of individuals. As such, they should be avoided.

  • Landholder Rights.
    Landholders should generally be free to use previously developed land as they see fit, subject only to the requirement that they do not impact on others by creating excessive pollution, noise, light blockage or verifiable danger. If there is a wider system of planning consent, any increase or decrease in land value as a result of planning permission or restriction should be reflected in the land rent paid for its use and only the current landholder should be able to apply for a change in planning permission for a plot of land. There should be no laws allowing the compulsory purchase of land use rights for less than the landholder's own valuation.

  • Open Country.
    Communities should be able to create national parks to protect areas of special natural value. There should be a general right to roam across open country.

COMMUNITY AND GOVERNMENT
  • Public Goods and Services.
    User fees should be the preferred method of financing public sector services, as they prevent cross-subsidy between activities and areas. The fees collected in this way should be used solely to finance the specific service being charged for. For those services where charging a direct user fee is not practical, land rent is a just form of financing, as the provision of public sector services in an area is, in part, what creates land values.

  • Geographically Open Financing.
    Public finance should be passed down per capita from the collecting body to subsequent lower levels of government, with each level of government required to take funds equally from the amount allocated to each member of its constituency and only to fund services which are provided without geographical discrimination within that constituency.

  • Citizens' Dividend.
    Once public sector services have been paid for, the revenue remaining from the collection of land rent, pollution fees, extraction fees, quota fees, etc. should be paid in equal shares to community members as a citizens' dividend.

  • Free Trade.
    Aside from the creation of natural monopoly networks, the preference should be for goods and services to be provided by a market completely free of government support for any provider, so that competition can drive efficiency, the availability of multiple suppliers can create flexibility and the excessive centralisation of power can be avoided. The government of a community should not establish any trade rules for the purposes of protectionism.

  • Government Powers.
    Government, which is merely the representative of the community, should not have significantly greater powers than those enjoyed by individual members of the community. As such, public sector organisations should be required to pay land rent, pollution fees, etc., at the same level as members of the community.

  • Surveillance and Privacy.
    Where a camera is used to record a public place, no public sector body should be permitted to obtain the recordings without a warrant issued by a judge, on the basis that there is good reason to believe that viewing the recordings is necessary to investigate a specific crime. Public sector bodies should only be able to obtain financial or communications data, or put a citizen under surveillance, if they have a warrant issued by a judge on the basis that there is a justifiable suspicion that the person being monitored has committed a crime. The subject of such monitoring should be informed within 12 months that they have been subject to monitoring, along with the details of the information obtained. It should be prohibited for any individual or organisation to intercept communications without permission. Citizens should be able to demand the removal of any camera which is fixed in a location which can record any premises they occupy.

  • Subsidies.
    Subsidies and special privileges of any sort should not be given, except in the form of support for the severely incapacitated and emergency aid in the event of a natural disaster or war.

  • Free and Open Formats.
    When a public sector body or somebody acting on behalf of a public sector body communicates or stores information, it should be required to do so in a format which has had its specification made freely available and which can be implemented by any third party without royalty or restriction.

  • Government Chartered Organisations.
    The Board of Directors of a limited liability corporation should be held legally responsible for activities which cause physical harm to people or prohibited damage to the commons. The government of a community should be able to require corporations to refrain from cartel, predatory pricing and monopoly forming merger and acquisition activities. Any information which a corporation is required to retain or transmit for a regulatory purpose should be in a free and open format. A corporation should not automatically be entitled to the constitutional rights enjoyed by humans. Specific taxes on corporations are in effect a charge for the benefits conferred by the corporate charter and should be considered a legitimate source of revenue.

  • Registration of Citizens.
    There should be no compulsory ID card or identity registration system, beyond a simple electoral register. The government of a community should be able to require citizens to obtain a passport, as well as remain on the electoral register in the community, if they wish to receive the citizens' dividend; however, the government should not be able to further restrict the rights or opportunities available to citizens within the community, if they choose not to hold a passport.

  • Elections.
    Government elections should be held using the Single Transferable Vote (STV) or single vote open lists. Voting should be conducted in secret on paper at a designated polling station. All adult citizens should have the right to vote, including prisoners. Voting should not be compulsory.

  • Legislative Bodies.
    Legislative government should be made up of two houses. The lower house should have its members elected from single member constituencies using STV. The upper house should have its members either randomly selected from those who wish to be a member or elected from multi-member consituencies. In either case, members of the upper house should be prevented from standing for election to any public office after the completion of their term in office. All legislation and any increase in government borrowing should require majority support in both houses. Legislation should have a sunset clause of no more than twenty years.

  • Constitution.
    A written constitution should set binding limits on government powers and any amendment should require the support of two-thirds of the members of each house.

  • Public Sector Debt.
    In order to prevent the cost of public sector funding being passed on to future generations, public sector bodies should only be able to borrow to finance capital investment (not expenditure) and any amount borrowed to finance a project should be repaid within 20 years.

  • Open Networks.
    Those physical utility networks which have traditionally been considered to be natural monopolies and held in state control, such as railway lines, telephone cables, electricity grids, gas pipe networks and water/sewage pipe networks, should be operated as not-for-profit consumer co-operatives. These networks should be as open and neutral to different users as possible to allow consumers to choose from a range of suppliers (such as different electricity providers or ISPs) and thereby create a free and competitive market. The network itself should not be legally protected from competition and should be able to price its services in proportion to the cost imposed on it by the individual user.

  • Money.
    If a government issued currency exists, new units of currency should only be issued through the citizens' dividend. If it is necessary to control inflation, this should be done by reducing the number of units of the currency in circulation by reducing the citizens' dividend. People should be free to use whatever currency they choose in their non-government transactions, including Local Exchange Trading Systems (LETS) and precious metals.

21 August 2008

The Ultimate Electoral Reform

I really enjoy coming across an idea which looks completely stupid at first, but makes more sense the more you think about it. I recently came across a suggestion for an electoral system which falls into that bracket - The Random Ballot.

A Random Ballot would operate in much the same way as First Past the Post; there would be single member constituencies and each voter would mark their preference with a cross. The difference would be at the count. In fact, the result wouldn't be decided by a count at all. Instead, one of the ballot papers would be chosen at random and the candidate on that paper would be declared the winner.

At first, the idea of only looking at one of the votes sounds absurd, but when looked at as a lottery, with each ballot paper being a ticket bought for the candidate by a voter, it begins to make a bit more sense. Every time somebody votes, they give their candidate another chance of winning. When the winner is chosen, each candidate's chance of winning is in direct proportion to the percentage of the votes they have received.

It would retain the advantages promoted by supporters of FPTP (a simple voting system and single member constituencies) but would do away with its three major flaws, tactical voting, a lack of proportionality and voter disengagement.

Tactical voting would be pointless, as there would be no reason to vote for anybody other than your preferred candidate. Even if they were lagging way behind the most popular candidate, your vote would still give them a chance of winning. As a side effect, a party could field more than one candidate in a seat without worrying about splitting the vote; 1000 votes for one candidate or 500 votes each for two candidates would give the party the same chance of getting a candidate elected.

With enough seats, the overall result would tend towards proportionality. For example, if, in every seat, Party A gets two-thirds of the vote and Party B gets one-third, under FPTP, Party A would win all the seats. With a Random Ballot, Party A would only expect to win two-thirds of the vote draws.

Perhaps the biggest benefit would be increased engagement of the electorate. A safe seat would be a thing of the past; the only way to guarantee victory would be to get 100% of the vote. Every seat would be a genuine contest and every vote would be valuable to a candidate. Even with 90% support, there would still be an incentive for a candidate to go out and get more votes to increase their chance of winning.

A system of deposits could be maintained to discourage an excessive number of candidates standing and a few top up seats could be awarded, in proportion to the national vote, to ensure that a major party wouldn't end up leaderless.

It wouldn’t suit a lot of politicians, who would see their seats suddenly becoming vulnerable, but for the electorate, it has a lot to recommend it.

It's one of the most bizarre suggestions for an electoral system I've ever encountered, but also possibly one of the best.

Copyright © 2008 Paul Lockett (paul-lockett.co.uk). Verbatim copying and distribution of this entire article are permitted worldwide, without royalty, in any medium, provided this copyright notice is preserved.