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           Home >  Business  > Economics  :

A New Direction Is Urgently Needed
Dorothy - 4/6/99

Part 3 of a three part interview with George Ridley.
If you haven't already, you may want to read Part 1.

A new direction is urgently needed, but what options are there? Some suggestions:

A shift in taxation
Shift taxes from things that are good to things that are bad, such as consumption of resources, pollution and waste.

Tax on use of the common resources
Tax use of the earth's resources of land, air, water and minerals in recognition that these should be shared equitably with the present and future generations.

Land tax
A land tax should be instituted which is progressive. All cultures place a high value on land. In Western societies agricultural technology has led to massive migration from country to city. In the city people have relied on business to supply jobs to maintain their livelihoods. For many this no longer holds. A land tax would allow the public, as a whole, to get some benefit from the land which is a major natural resource like air and water. In New Zealand consideration would need to be given to issues arising from the Treaty of Waitangi.

"Experts" in economics consider this to be the tax with the fewest distortions.

A universal basic income
Give a universal basic income (UBI) to everyone in recognition of the value of unpaid work, whether in the home, in birthing, in nurturing, in voluntary work and as a share in the commons.

Energy tax
Institute an energy tax as an incentive to economise in the use of energy. This impacts more on the affluent than on the poor. It should lead to a lessening of transport congestion. It should help conserve non-renewable resources and move technology towards renewables.

Shift from GDP as a measure of society's well-being. Taxes should be applied at source wherever possible. A good starting place would be a carbon tax on coal, hydrocarbon fuels and natural gas. such finite resources as natural gas, LPG, petroleum and coal. These resources of the planet are a commons which should be shared equitably with everyone. Those who are trying to keep these assets as their own should be prevented from doing so or made to pay in some way. The Universal Basic Income would ensure that everyone has a share.

Tax on alcohol, drugs and tobacco
Increase taxes on alcohol, drugs and tobacco. Cannabis should be treated consistently with alcohol and tobacco and controlled with regulations and taxes. These taxes should be used to raise revenue as well as to discourage harmful effects.

Changes to be made as a package
George believes that the whole range of changes would need to be treated as a package, even though they might take some years to implement fully. To increase taxes on energy without introducing UBI would be unfair on those on low incomes.

All people are entitled to a share of the planet's resources. but no person nor corporation is entitled to free consumption of them nor the freedom to pollute them. A tax on those who use or damage the air, the water, the land and the minerals should encourage their preservation.

Removal of taxation on benign activities
Investment, savings and productivity which are benign should be encouraged by the removal of taxation on them. Income and profit taxes would be reduced as the other taxes were implemented.

Tax on international financial transactions?
Possibly it would be worthwhile to investigate the Tobin Tax which would be a tax on international financial transactions to provide funds for international bodies like the UN and to discourage short-term capital movement.

Full implementation could be expected to lead to:
* A universal basic income which would mean a massive simplification of the benefit system with reduced costs and elimination of the poverty and unemployment trap.

* More equitable distribution of resources between men and women

* The elimination or at least a massive reduction in poverty

* A reduction in the crime that is associated with poverty, which in turn would result in reduced costs in policing

* A reduction in the taking of hard drugs as people's self esteem improved

* An improvement in school attendance as more parents would be at home and able to check on their children's activities

* Better home care as was highly valued in the code of social responsibility

* A solution of the unemployment situation. As there would be no need for a minimum wage people could bargain for jobs which they would be happy to take. Employers would have to pay more for the unpleasant jobs, but employer-employee relations should improve and lead to efficiency gains. People would be able to take part-time jobs or work of short duration without losing their benefit as at present.

* The removal of the stigma which some people feel is attached to being on the dole or the DPB

* Reduced stress in a society which offered security without stigma.

* A reduction in the youth suicide rate.

* More scope for creativity

* A settlement in the superannuation debate

* Recognition of the work of unpaid work

* Resolution of the difficulties over de facto or partnership relations.

Why is it urgent for changes to be made?
The longer we wait before changing direction the harder it will be to make the changes.

Why should New Zealand lead the way?
Interest in these changes is worldwide, and New Zealand is a small country and in a good position to set an example.

How would the people of New Zealand react to the changes?
There would be a lot of resistance to the changes in the beginning, but George believes that if we embrace them with courage it would be a good foundation for the future of all people and the planet on which we live.

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