ARMs National

The following is a post from a PCS member. PCS has no position on the matter. It is hoped to stimulate discussion. Feel free to add your comments. 

Life after Covid-19

How we can stimulate a fair economy as well as a healthier and green environment

After we recover physically, mentally, socially and economically from Covid-19, we should not accept an economy where we have business as usual.  We need a reformed economy that offers everyone economic justice and a healthier, sustainable and green environment. An economy that recognises the worth of all people and an economy that recognises the importance and power of controlling our natural resources and natural resource wealth in tackling the damage we have done to our planet.

There is much written about the serious problems a growing number of people face but all the time the rich still get richer and richer because we don’t offer permanent solutions to these ills, just sticking plasters. We need a structural change to how our economy works with a fundamental shift from taxes on wages and earned incomes to   an economy based on economic, social and environmental fairness where we tax unearned incomes.

We all need access to land to survive.  We need access to land for jobs, our homes, our food, our public services, our businesses, our transport networks, our leisure, our raw materials etc.  This means those who claim ownership to land (and all other natural resources) can hold the rest of us to ransom.  Landowners have immense power both in terms of how land is used and in seizing land wealth for themselves and their families.  Most economists ignore the fact that land wealth is created from all our combined efforts and our demand for its use not from owning it. The UK’s land wealth is currently worth over £5.3trillion, ie over 51% of the UK’s net worth. 

“Land” is not just the rolling hills or the beautiful vistas of our countryside, land is the surface of our planet. Every home has two values, the value of the building but more importantly the value of the location of the building – the land value.

Economists seem to have forgotten the law of economic rent.  There are three factors of production – labour, capital and land (which includes all natural resources); the return to labour is wages, to capital is profit or interest and the return to land is “economic rent” which is the excess income left after the costs of labour and capital have been met  

We need a fair tax system as well as other progressive policies to make fundamental changes that benefit all of society permanently - one that shifts taxes from wages, savings and worthwhile production to the unearned income from land; one that protects our land and other natural resources from over-use; one that cannot be avoided or evaded; one that rectifies the historic wrong whereby land ownership and land wealth has been taken by a few and left the rest of us subject to their control.

If there was a move to replace bad and distortive taxes with an annual Land Value Tax (LVT), we could be rid of land speculation, empty and underused homes and commercial buildings and idle development sites would be brought into use. Thus, residential and commercial properties will become more affordable to rent or buy and there would be less demand to build on green land in our towns, cities and countryside.    LVT is an annual levy on the value of every site according to its optimum permitted use – similar to the rating system but only on the location value and excluding buildings and with no exceptions.

As natural resource wealth taxes are introduced there should be abolition of current property taxes and abolition of or at least a reduction in distortive and negative taxes including income tax, national insurance, VAT and corporation tax.  These and most other taxes (except behavioural and green taxes) actually depress the economy and do not allow other positive economic and social policies to be properly implemented. 

We have an opportunity to move to a fair and green economy that benefits all and not the super-rich.

 

Heather Wetzel