Reforming the tax system

A person’s time, innovation, labour and savings will not be subject to taxation.  A sales, or consumption tax (‘fair tax’), on goods and services, must become the prime means of raising revenue to meet local and national need. This single sales tax must not disadvantage the poor, penalise innovation, or inhibit healthy commerce and entrepreneurship.  It follows the component in current prices that cover the existing tax regime must disappear.  The overall aim will be to establish a single base sales tax of about 17-20% on all goods and services, obtained at point or time of sale, covering both national and local taxation.  Local economic regions or communities would also have the right, through referenda to vary the sales tax if local conditions, need or competitiveness called for it.    

Should it prove possible the fair tax will be reduced if the fiscal and loan default reforms in Reform Group 3 make it possible.

Local and regional/state infrastructure and facilities will also be supported through the goods and services (sales) tax. Proposed public works must be accepted by the community through referenda, with the sales tax rate increased for the period needed to pay for the approved public works.

The national and local sales tax will be imposed without favour to social status, except where exemptions are made to help support the poor and raise additional revenue off luxury or socially harmful goods. No sales tax should be imposed on the genuinely poor with respect to staple food and clothing items. Conversely, a higher sales tax on luxury items might be imposed to offset tax deductions for the poor.  One off regional, local or national projects would also be funded by raising the sales tax on specific products or services (like gambling or money market profits).  It has been estimated taxing the money markets , even at very low levels would raise huge sums of money and might also be used to smooth out market volatility. High cost luxury products, processed foods, alcohol and other products carrying downstream social costs would carry a much higher sales tax.

Corporate profits earned by trans-national corporations should be reinvested in the country of origin and subject, if moved off-shore to heavy taxation.  To give effect to this recommendation exiting corporate-protecting restraint on trade agreements, or other trans-national treaties, shall be exposed to retro-active referenda.

Tariffs will be re-introduced on products imported from nations with a net trade surplus, but not imposed on a penalty basis.  Tariffs will simply create a fair, level, competitive playing field for all concerned.

Where petrol taxes are necessary they will be replaced by road user charges –a road users tax on millage for particular classes of vehicles, or road use tolls.

Transitioning to fraternal societies will shift pension provision, unemployment cover, health insurance and other welfare costs to individuals, no longer saddled with a heavy tax burden and able to access interest-free credit.  In the transition to fraternal societies central government taxation typically taken in one year, under the old system, will be distributed to newly formed societies to provide them with the initial kick-start funding needed to shift to individually funded welfare and health insurance provision.  A proportion of the central government’s sales tax will still be used to provide a last resort fund for any local welfare short falls.

Please note: Some argue for replacing income tax with heavy taxes on 'non producing' earnings from land, rents and money market speculation, or anything else where money is made from simply 'gaming' a rigged system.  The 12 reform programme will not allow for that as most of these sources would be eliminated via the money market reform.