1. For an economist, the idea of hypothecating taxes is a bit of a nonsense. Nonetheless, politicians know that earmarking a tax makes it more acceptable to those paying it.
2. I received a classic KLN via Twitter (so classic that even some socialist LVT supporters have advanced it), along the lines of this:
"If you phase out National Insurance and have Land Value Tax instead, how will the government pay for people's unemployment benefit and old age pensions?"
To which the answer is, don't confuse the tax raising side and the spending side. The government can pay pensions and welfare out of borrowing, National Insurance, income tax, Land Value Tax or anything else.
3. We also know that the Home-Owner-Ist majority hate the idea of Land Value Tax. Why should they pay for something they already own, that sort of thing.
4. It is widely believed that it is widely believed the NHS to be some sort of highly prized national treasure (I have no idea how true this is), but we know that it has to be paid for, cost approx £125 bn per year.
5. Sticking with politics, Value Added Tax is imposed on each Member State by the EU. (There is a also widespread misconception among the chronically innumerate that all our VAT receipts are handed over to the EU, but put that to one side). Brexit is our Golden Opportunity to rid ourselves of this troublesome tax, revenues approx. £120 bn per year, economic damage/deadweight costs at least half as much again.
6. With my Georgist propagandist hat, I have merged 1 to 5 into a nice simple policy proposal:
Now that we are leaving the EU, we can scrap the most damaging and regressive tax, Value Added Tax. To make up the shortfall and pay for the NHS, we can have annual "NHS contributions" of 1.8% on the value of each home, which landlords can add to the rent if they so wish. On average and in the longer run, people will get their money back. It's low cost mass insurance - those who seldom need the NHS should be grateful to have their health.
Pensioners, who cost the NHS on average £5,000 a year each, have nothing to complain about, as in most cases their "NHS contributions" will be far less than the corresponding cost of private health insurance/private health treatment. Some people in higher value homes will be paying over the odds, but they are free to trade down to something better value.
Debate Magazine
