Are there any good taxes?

There is a simple answer to the question are there any good taxes? It is NO.

But that does not mean that taxes are not inevitable and some will need to be paid to keep communities secure and manage key services from rubbish to justice. But the idea there is good tax, as being floated by some politicians, is rubbish.

The problem is politicians and bureaucrats too often see their job as spenders of money. Why? That is not their job: their job is to administer our public affairs as inexpensively and equitable as possible. It is not to look for new ways to spend your money. But as I read about new initiatives to find new taxes I can only conclude that our politicians are deluded in what they think their job is.

I thought about this long and hard when Iwrote the Aquitaine Trilogy. The concept was to create a new society and thus a new way of governing. What I believe is essential is to keep voters as close as possible to the spenders and for them to have some sanctions on those spenders. The most obvious is to vote them out of power. But the problem is that more and more it is bureaucrats and not the politicians who are in charge: but they largely remain faceless.

My solutions were varied. I restricted central government spending to that which was essential, transferring most local functions to the local area council who had to raise the money they spent themselves. So they had an ability to raise all forms of tax including income tax, but such tax was to a maximum level of both personal income and GDP. There was a specific policy of not paying money between departments and sectors of government. Whatever the argument about one collecting point for all one type of tax - income tax, sales tax etcetera  - I do not believe there is a real saving when the money is then transferred round the system. It was also specified that an area did not have to provide a particular service - say health or schools - it had to see those services were available at a sensible price, or in cases free. Central government provided regional hospitals of excellence and universities as well as major infrastructure and a national police force but not local police. Thus an area council could say privatise everything and offer very low taxes, whereas a next door area could offer higher taxes and more free services. The final kicker for the areas was that new areas could be formed by popular consensus - so a big area could lose a chunk of its area - and communities on the edge of an area could transfer to the next if they so desired. Needless to say such changes could not happen every few months however the point was that local councils had real power as well as real responsibility and they could easily lose part of their fiefdom if they did badly. That is genuine power to the people and runs totally against all modern trends where central governments are claiming more and more power - in the US there is a growing rift between the states and Washington, and in Europe it is worse where an unelected bureaucratic autocracy is ordering around the sovereign states. This is the reason the people have lost faith in politicians.

Another point was that central government taxes were if possible linked to what they did - instead of going into a nebulous pool to be paid out as the government decided. For instance road tax was spent on roads and health fund on health - this means voters get to understand what government services really cost. It would be nice to be know what say health really cost even if an opt out is not an option.

The final point about the Aquitaine administration is the civil servants were in charge with two parliaments acting as supervisors and controllers. The civil service brief was simple - to keep the ship of state on a safe course without violent deviation. The politicians could suggest a new course and if the other house agreed that course had to be followed, or the civil servants could simple accept the recommendation in the first place. Of course the heads of various departments were required to report direct to both houses and could attend and take part in debates as relevant.

The point that was engrained was do not tax unless essential; do not spend if you can avoid it. Certainly nobody in those circumstances would be suggesting there was good tax - yes tax is inevitable but it is not good and it never should be good.

A moratorium on all new taxes and ways of collecting money from the public might be a good way of getting governments pointed in the right direction: reducing spending not looking for ways to finance excess. Now more than ever we need to live within our means.

Responsible capitalism - we had it once.

The current buzz word in politics is greed. The greedy bankers and their bonuses, the greedy executives and their pay, the greedy corporations who don’t pay enough tax: they are all getting their share of bashing. In the next sentence there is talk of stimulating small businesses and getting new enterprises going - I don’t like to say it too loud but the main motivation for entrepreneurs is greed: they want more than the next guy. And certainly don’t mention the greedy MPs and their expenses...! But I will ignore that but get back to responsible capitalism.

Governments have done so much over the years to destroy responsible capitalists. A classic is family businesses which have all but been eliminated by estate duty and other tax problems. They were usually very much part of the community and helped within it. Also business has been positively discouraged from getting involved in welfare - state bureaucrats believing they were better at it. Every old town has alms house that were built by local communities - often the principal employer. Factories often employed doctors and had clinics for their workers. In Japan factories have full welfare services for their workers but the liberal minded do not like that- it is seen as patronising and entrapping workers.

And that is problem once the socialist ‘I know best principals' get engrained. There are so many little places the state has started regulating; applying a set of arbitrary rules that make giving so much harder. A recent issue was about the right to use grounds for games and recreation - land owners often allowed a field to be so used and in most cases their main concern was simple to keep the ground as it was but suddenly the state is stepping in and trying to claim the land, and there are more and more issues of liability which mean the land owner has to have expensive third party insurance - inevitably the owners get nervous and withdraw the right to use the land. This is a small example but it is often felt, by those with money, that no act of generosity goes unpunished.

But what is responsible capitalism - I am not sure anybody really knows. There have always been people making muc muc money. In the UK the mill owners of Victorian era were pilloried but they bought huge wealth to the north central region of England. I know more than a few people who have become significantly rich often starting with very little and we celebrate those people - Branson, Sugar et al. are a few bigger examples. What seems to be the complaint is about the people who run, as opposed to setup, big businesses: as though ongoing management is simple.

The modern multinational corporation inevitably is interested only in one thing - profit. It is difficult to have a friendly face when the boss is a long haul flight away, and the ultimate master a diverse group of international shareholders - with the largest being funds set up with the sole purpose of making money. And dare I point out those funds are where most pension money goes.

I suspect the real problem is more that as we have drifted aimlessly from a great manufacturing power to a service led economy we have lost the high paid job. I live in an expat community in Asia wherethere are plenty of high earning Brits and thirty years ago their work would have been in the UK: now they have to travel. The UK is full of plodders doing very ordinary work with a small elite of high earners who are senior managers or high level traders - the people I have met recently are mainly engineers of one form or another as well as divers, accountants, training pilots and even headmasters. Norman Tebbit famously said it “Get on your bike!” Sadly that now means going to Asia or the Middle East - well anywhere but the UK and Europe.And as to those high salaries as I pointed out in another blog nobody condemns sportsmen’s salaries and some of those look even more obscene than bankers. Of course the trouble is exacerbated by legislation that has meant these salaries are now published. However people who get high salaries pay tax and spend the money in the UK - it is not as though the money magically disappears abroad as it would do if say all the big city traders located to a friendlier tax regime.

But a politician’s logic is not relevant when banging a populist drum.

To me the real issue is incompetent government who never understood the too big to fail problem when it came to banks. In fact successive governments have allowed the multi nationals to own more and more of the UK industry. Put simple when it comes to industry the government are no longer in control. They can huff and they can puff but if they threaten to blow the house down by pursuing nasty capitalists they will simple disappear to another domicile. On top of that pinning down national companies with more rules just makes them less competitive in a globalised world.

Responsible capitalism is when the profits of capitalism find their way back into the system where they were created and get invested and spent locally because in the end a banker earning millions is good for the UK as long as he stays in the UK. So maybe responsible capitalism requires a responsible government that encourages high earners to stay and spend in country.

Life goes on - but what if.....

I have been around for a long time - I am not far away from God’s allocated number of years. Over my life I have seen many crises come and go. I lived through the cold war when we were all a button push away from extinction - or so we were told. I remember a man with nasal voice telling me the pound in my pocket had not been devalued - it had been and since it has been devalued even more. A nice man on the telly said what Henry Higgins has been telling us for years - that in Hampshire hurricanes hardly ever happen - well I was there when one uprooted boat moorings, trees and sheds. But the great thing was that life went on - disasters have hit the world - 10,000s have been wiped out in seconds but the next day we wake up and lo and behold the sun comes up in the East; and slowly but surely it gets into the psyche -life goes on.

But what is more important is how life goes on - we in the West have had a cushy time since the last world war. Of course that war was not so good for a large number of people but now fewer and fewer of our number remember the realities of that era so as a society we fear little and the government looks after us if we have no money so life not only goes on but we have food and shelter.

And that is the problem for those who see rocks, if not a reef and an iceberg ahead. The Concordia sinking is ironic in that not only was it an enormous ship that appeared unsinkable but it was also almost exactly 100 years ago that another enormous unsinkable ship proved it was very sinkable and frighteningly the next thing that happened was Europe was engulfed in a brutal war and whilst the cost in infrastructure was reasonably minimal (out of the war zones) the financial cost was massive but not nearly as horrible as the cost in prime young men. Then that awful war led to an even more evil and brutal war twenty years later that destroyed and impoverished most of Europe.

Of course we then got up, shook ourselves and got on and rebuilt the place - life goes on. But for a few years it was a very hard life for most and extremely unpleasant for some - to add to a large number who did not make it. But we were a very different people in 1939 - hardship was much more of a norm, there was no social security to speak of so we had to be self sufficient. But today we are nowhere near that: most of us would not know how to live rough: despite all those telly programs where the survival expert conveniently finds a dead sheep.

But when I look at the world today with a jaundiced eye I see potential for grief in far too many places. However you dress it up our economy is weak primarily because we have systematically let it go: closing factories because it was uneconomic when compared to others who use a labour force earning less than a tenth of ours and work in conditions which would ensure those factories would be instantly closed by regulators here. We have never been so regulated yet we have a large pool of people who are living on welfare - which we are paying for - who have no intention of working in the system. Then the Euro crisis is threatening to knock ten percent off our GDP. Even an illiterate should be able to work out that if that happened the government already running a massive deficit, and with a rapidly expanding debt to GDP ratio, would not be able to cope. Nobody wants to think about that. I won’t even mention the spiralling cost of a free health service. Would Europe suddenly be impoverished as Greece now is? It looks like it could be: even the ultra efficient Germans would find it hard with all their customers skint and Chinese would be far from happy as their factories grind to a halt and unemployment goes up. Such autocratic regimes in the past have found military expansion a surefire way of keeping the population under control. And there are plenty of potential flashpoints in Asia - Spratleys, Taiwan, Korea etc.

On the military front we at least look safe enough - but are we? Iran looks as if it might defy all logic and try and take on the world on in the straits of Hormuz. But that is far enough away one thinks but in travel terms the Balkans was further way in 1914. Such a war could quickly empower others - Falkland’s looks like such a potential flashspot. And domestic terrorism has been little more than pin pricks to date - unpleasant yes, lethal for some yes but in real terms pin pricks (and yes I including the attack on the twin towers) but would another Gulf war finally make Islamic terrorism something other than a massive inconvenience when we fly?

Needless to say many will say I am scaremongering - and I know that. But the trouble is nobody thinks about what if - a bit like the Euro when it was cobbled together the what ifs were swept away however they are now back to haunt the world. I am sure the sun will come up in the East tomorrow morning but will we still welcome it in our cushy homes and safe environment?Because I fear today we are totally unprepared for the hardships that could appear in seconds and crush us as effectively as a tsunami.