Imagine a Scotland where every citizen has a right to a basic guaranteed income, funded by the state. An arrangement very like a state pension, but paid from birth, with its value rising from infancy to adulthood.
Just to make it easier to envisage, let's say that each adult receives £100 per week, and parents get £50 per week for each child. That would give a family of four an income of £15,600 pa, and a single adult an income of £5200 pa. The numbers are merely indicative.
This income, let's call it Civic Credit, would be untaxed and would be paid to every citizen, regardless of their income or employment status. It would replace all forms of basic income support such as income support, tax credits, jobseeker's allowance, child tax credit, child benefit etc.
This would be funded by a progressive income tax, designed to be redistributive. Income tax would be payable on all income, other than benefits, and there would be no tax-free thresholds and no social security.
Banding would be used to ensure that those on middle incomes would retain around the same post-tax income as now, less the amount of the Civic Credit, giving them the same approximate disposable income as at present.
The lower band might be set at 30%, the middle band (say above £40k pa) at 45% and the upper band (say over £100k pa) at 60%. At these rates and bands, a single person would pay the following effective rates of income tax, taking the civic Credit into account:
- Salary of £20,000 pa – 14% tax
- Salary of £60,000 pa – 32% tax
- Salary of £150,000 pa – 47% tax
These figures are provided solely to make the proposed system easier to visualise, and are not intended as a serious proposal of a worked out system. They do, however, demonstrate the progressive nature of the tax system which would result.
The main advantage of this system is that it would remove the need for most of the benefits paid by the welfare system, while providing a safety net for everyone in the country.
Child poverty would be eliminated immediately. Administrative overhead would be markedly reduced. It would also substantially wipe out fraud, as there would be little scope or point.
Combine this with a simplified taxation system, provided by a brand new Scottish Revenue without the baggage of HMRC, and a legal framework which mitigates against tax avoidance. We could construct a combined tax and benefit system which is in line with the progressive aspirations of the majority of Scots.
Might that not be a compelling reason to vote yes to independence.
I offer this sketch, not as a template for a future Scotland, but as an example of the sort of vision which can be contemplated when starting afresh. The referendum on independence offers us a once in a lifetime opportunity to rethink everything we have taken for granted for centuries.
Just as crucially, perhaps, we risk the failure of the referendum, if we fail to inspire.
Presenting an anodyne view of independence which minimises the shock of the new will do little to inspire those who are currently undecided. The more aspects of life we assert will be unchanged by independence, the less compelling the need for change will appear.
Why take a leap of faith when the place you will land looks so much like the place you are standing.
Why take a leap of faith when the place you will land looks so much like the place you are standing.
And that will leave the game to be won by the nay-sayers, the scaremongers, the fearties and the self-interested. Those who Margo MacDonald has dubbed the “abominable no men”.
That is not to say that it is wrong to counter unionist fears with well-laid plans, nor that is it wrong to fight just one battle at a time.
But surely this is also the time for radical, creative, visionary thinking which demonstrates the purpose of self-determination by showing us what we might use it to achieve.
And what could be more inspiring than that.
Bob Duncan
Bob Duncan
I noticed this on Newsnet Scotland but decided to post here at the source.
ReplyDeleteNice stuff, and the sort of thing that should get a wider audience.
We should assume Yes in the referendum and start looking at better options to run the country. Start looking at more imaginative solutions and ideas, such as the one you have outlined.
We can look also at fuel; should households not be given a weekly fuel allowance? X units per week: below which they do not pay and above it they pay the extra amounts.
I'm sure thousand of other people can think of thousands of other ideas worth considering. The problem is to get people engaged and keeping them engaged.
Not one hundred percent with you on the taxes. I veer toward a service based country rather than a tax based country. That is we pay, either as individuals or as households (for example) £50 a year for Policing, £50 a year for Fire services, £50 a year for refuse collection, etc. Health would be like an insurance policy of X per month on an ongoing basis. This way money for policing does not get diverted to social work as it's separate and not all in the one big pot and - most importantly - politicians are kept out of as much as possible.
To paraphrase you we should be seeking to inspire with positives for a new Scotland.
I'm with you broadly on hypothecation of taxes (or charges), but you seem to be advocating a poll tax, which is where we diverge.
ReplyDeleteThe thrust of the argument was the need for radical debate and thinking, rather than the details of the scheme expoused here.
Thanks for the response. Firstly if we don't have any details how can we debate, accept or reject anything?
ReplyDeleteHow is it advocating a poll tax? A poll tax is a fixed amount per person most often designed to disenfranchise or just for the sake of collecting money. This is a set amount for a service. Also, if I'm correct, a poll tax is compulsory. Service charges wouldn't be: if you don't pay for them you don't get them. I understand they could be controversial but the Fire system actually exists in some states in America. There were a couple of stories last year of fire crews turning up to burning houses and not doing anything as the person hadn't paid the annual $75 fee.
I understand any 'solution' would bring new problems but I think if we went from 'taxing' people on their incomes to 'taxing' people for services it would streamline a lot and produce a healthier society.
People lie about their income to avoid taxes (hello Jimmy Carr) and no doubt people would seek to cheat a service system too but at least it's a something for something system; pay this amount get this service. And yes I would be advocating a no income tax country. If it is kept to the principle of getting money from the public in return for a particular service I would expect to live in a much better country than the one we are in which is basically imposing taxes to pay for spending - or overspending as the case most often is.
You appear to be advocating a fixed charge per service, regardless of income or wealth. That is the definition of a poll tax (everyone pays the same amount). Even if your service charges are not mandatory, you will fail to recieve the service if you do not (or crucially cannot) pay the charge. There is little benefit to be gained from the scrapping of income tax if you have no income.
ReplyDeleteIt is difficult to see the difference between what you are advocating and the old community charge, except that hypothecation lets you choose which services you will be denied.
The system advocated above is deliberately redistributive. I feel that those with the broadest shoulders have a duty to contribute most - not least because it is the very society to which they are being asked to contribute which has created the opportunity, the infrastructure, which allows them to generate their above average income.
The corollary of this would seem to be the Thacherite view that there is no society, only individuals and their families
This article advocates radical thinking but I only seem to get reactionary responses.
ReplyDeleteThese proposals aren't about poll tax or not poll tax, they're about a nation looking at radically different ways of raising revenue other than falling back on the just tax them option. ('I offer this sketch, not as a template for a future Scotland, but as an example of the sort of vision which can be contemplated when starting afresh.') Indeed, because other ways of generating revenue are opened up I think personal income tax can be abolished. And that's the crux of the matter here: raising revenue for a nation and its services.
It should be noted from the first response I gave that I am for giving everyone things too, such as the proposal for X pounds per week in the article and my proposal for free X amount energy per week. So the attempt to slur me with Thacherism is not valid.
If someone has no income they should get a f*cking job. Dear God the whole debate about independence is rooted in Scotland standing as a nation on its own two feet making its own way in the world, we must expect that of its people too. Playing the poor, no income card to reject a different way of raising revenue is a very limited argument.
We have a society that is made up of individuals and their families. And we should share burdens equally and not demand that because someone is big they should push more than the little guy. You'll find that the big guy gets wise to the situation and might not push as much. That's not 'the rich will leave if you tax them too much' it's just pure human nature. Which is why we should look at different ways of raising revenue from the people and business in Scotland to fund the running of the country.
Firstly, can I say that this discussion is exactly the type of debate that I was advocating in the article. We may disagree on the way forward, but we are both examining solutions which are very different from the status quo.
DeleteIf I have understood your proposition correctly, we appear to be proposing options at opposite ends of the political spectrum, which tends to be where they become interesting.
Secondly, in terms of my response to your proposal, am I correct in stating that you would have the school cleaner on minimum wage pay the same in cash terms for government services as the merchant banker on 5m pa plus bonuses, or risk losing (say) health care or emergency services.
If so, I would question the practicality as well as the morality of the system proposed.
However, I would defend to the last your right to argue your case, which I am sure would also be shared with a significant proportion of the Scottish electorate.
Radical debate surely means engaging with the spectrum of opinion, not just discussing with others ,who share 99% of your views, how many angels can dance on the head of your favourite pin. I detect an element of the latter in the current debate.
ps I did not mean to imply that you were a Thatcherite, simply that negation of the individual's responsibility to society was what led us there in the 1980s.
Thanks for the response. It was probably my paranoia re Thatcherism, but it should be public knowledge that the use of any form of that word in Scotland is an incendiary more often than not. I think you're right in that we both may be trying to push our own system because of the underlying philosophy of it and maybe not on its merits.
DeleteWe should also try to discard politics too - as much as possible. I think most people would find something they could agree with in every political manifesto, even with the political parties they disagree with most. Ergo politics should go out the window head first as it is very divisive when searching for the common good. And morality, by and large, is as shifting a plane as politics. 'Right wing morality' is different to 'left wing morality', Christian morality is different to Islamist morality: there may be core areas of agreement but it is viewpoint that leads to differentiation and division.
I think the debate may have to firstly be on the core principles the people of Scotland want the country of Scotland to be run on and then what systems best embody those principles.
To answer your question I for one don't believe that the amount of money a person has or earns should bear any relation to what they pay for public services. A rich person doesn't pay any more for the Times or the Sun than a poor person, a rich person doesn't pay any more for a TV license than a poor person. Just because it has already crept into the personal tax system doesn’t make it natural or right. Plus it is different for companies, which are not treated in the same way in that a company that makes billions doesn't pay a higher tax rate than a company that makes thousands. Also companies are taxed on profit while people are taxed on income. Why not one or the other for both?
If the fundamental principle of wealth equals amount paid why isn't it applied across everything? You're very physically fit? You should be required to do more physical jobs. You're very smart? You should be required to do more mentally demanding jobs. What do you think the reaction to transferring the income tax principle to other areas of life or public service would be?