Naomi Fowler ■ Ethical accounting, Brexit crisis and threats to public health services: August 2019 Tax Justice Network podcast
In this month’s August 2019 Taxcast, ethics and accountancy – yes they can go together!
Plus: as Britain sinks into full crisis-mode over Brexit, we bring you unique analysis on some of the far-reaching consequences for the world, including threats to public health service models. And, why does the new British government love Freeports so much when they’ve been condemned as centres for money laundering and tax evasion?
Featuring: Professor Atul Shah of City University in London (author of books on Jainism and Ethical Finance, about the largest corporate failure ever in British history the HBOS collapse and on ‘Reinventing Accounting and Finance Education’. Also John Christensen of the Tax Justice Network.
Produced and presented by the Tax Justice Network’s Naomi Fowler.
Accounting was taught in a sort of a technical way, almost in an a-cultural way. Relationships, culture, and even ethics and values do not really matter. It’s all about being technically competent and being very good at tax avoidance and profit maximisation… However…we should not close our eyes to the huge transformation that is going on in society. There is a new dawn which is happening, you know, like the 13 year old marching against climate change…resistance is coming from the old guard, from the traditionals. And business schools, if they don’t change, if they don’t innovate, they will find their market drops like anything and then where will they go searching for students and professors? So there is a tremendous change going on and we need to tune in to that change and to the demands from young people for an ethical financing.”
~ Professor Atul Shah
Britain’s National Health Service is…one of the largest purchasers of pharmaceutical products in the world. And that makes it a very powerful economic actor on the global stage…many of the most predatory, private health sector companies are US insurance businesses or health service providers, and of course pharmaceutical companies, they are pushing very, very hard to have access to the UK market and to break up the National Health Service and this is almost certainly going to be one of the key issues around which trade negotiations between Johnson’s government in Britain and Trump’s government in the United States are going to be focusing attention
~ John Christensen, Tax Justice Network
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Please include this essay in your publication about socially just taxation.
Socially Just Taxation–Its 17 Effects On: Government, Land Owners, Community and Ethics
A wise and sensible government would recognize that the problem of poverty and unjust social conditions derives from the lack of opportunities to work, earn and sensibly reside. It can be solved by the introduction of a tax system which encourages the proper use of land and which stops penalizing almost everyone else who does not own it. Such a tax system was discussed about 140 years ago by Henry George, a (North) American economist. In his 1879 classic book “Progress and Poverty”, George proposed a single tax on land values without any other kinds of taxes (on earnings, purchases, capital gains, developed property not including its sites, gambling, etc.). Land value taxation (LVT) has 17 features that benefit almost everyone in the economy, except for the employment of big tax departments, landlords and bankers, all of which or whom do nothing productive—where the last two exploit the rights for land monopolization, the ill effects which are encouraged and supported by legislation through the government.
17 Aspects of LVT Affecting Government, Land Owners, Communities and Ethics
Four Aspects for Better Government:
1. LVT, adds to the national income as do other taxation systems, but it should replace them.
2. The cost of collecting the LVT is less than for any other kind of production or capital goods related tax. It is more efficient and tax avoidance becomes impossible. Sites of land are visible to all and their ownership is public knowledge, due to the introduction and use of land-value maps with tables of sites (parcels), with formal numbering and definitions of them.
3. Consumers will pay less for their purchases, due to lower production costs (see below) and no purchase tax. This means there is more satisfaction with the better management of our national and local affairs, which are seen to be on a fairer basis, without favoring the wealthy.
4. The speculation in its selling price and the withholding of unused land is mostly eliminated, see item 7, and the national economy stabilizes. It no longer experiences the 18 year business boom/bust cycle, due to periodic speculation in land values (see below).
Six Aspects Affecting Land Owners:
5. LVT is progressive–owners of the most potentially productive sites pay the most tax. Urban sites provide the most productivity and should be charged the greatest resulting tax. Comparatively, rural sites have less productivity and associated value. As a result they are farmed for production in an appropriate way and at a lower cost.
6. The land owner pays LVT regardless of how the site is used, but according to its potential for use. Nearly all of the existing ground-rent from tenants becomes the LVT. This results in the land eventually having less sales-value but it retains a significant rental-value, even when it is unused.
7. LVT stops speculation in land prices because the withholding of land from proper use will no longer be worthwhile. It costs the land owner the same, regardless of its actual use, or when this opportunity is lost by the withholding of the site from access for production, residence, etc.
8. The introduction of LVT initially reduces the sales price of sites, because more of them become available and the competition for the access rights to them becomes less fierce. Their rental values grow over a longer term due to the increase in the local infrastructure, which is a required aspect during the greater resulting site development.
9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to the additional sites that become available, from item 7 above.
10. Speculators and monopolists in real-estate will want to foreclose on their mortgages and withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow these speculators sufficient time to transfer their money to company-shares, etc., and simultaneously to meet the increased demand for produce (see below, items 12 and 13).
Three Aspects Regarding Improved Communities:
11. With LVT, there is an incentive to better use the land for production, commerce and residence, rather than it being left idle. Communities become more efficient in communications, introduce less sprawl and improve their living standards.
12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses. They initially pay less ground-rent and production costs will fall, goods supply will grow and unemployment will decrease.
13. Previous investment money is withdrawn from land and instead is placed in the shares of companies and used for purchasing durable capital goods. This means more advances in technology, greater productive efficiency and cheaper goods, too.
Four Aspects About Ethics and Social Justice:
14. The collection of taxes from productive effort and commerce is seen as socially unjust. It reduces the progress of the nation (due to the need for a big tax collection “army”) and certainly redistributes where the money goes. The rent and added sales-values of land due to its monopolization and non-use, are generated without any exertion on the part of the land owner or by the banks. LVT replaces this national extortion by gathering the surplus rental income–LVT being a natural system of national income-gathering.
15. The previous degree of bribery and corruption, for gaining privileged information about proposed land developments, will cease. This previously was due to the leaking of news of municipal plans for housing and industrial development, causing shock-waves in local land prices (and municipal workers’ and lawyers’ bank balances).
16. The improved use of the more central land sites of cities reduces the environmental damage and pollution due to a) unused sites being dumping-grounds and b) the smaller amount of fossil-fuel use when travelling between home and workplace.
17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way–to provide more jobs because their production costs are reduced. Then untaxed earnings will correspond more closely to the value that the labour puts into the product or service. Consequently, after LVT has been properly and fully introduced as a single tax, it will eliminate poverty and improve business ethics.
Switzerland has long had a massive freeport next to Basel airport
Yes indeed
Sure. TJN has always STRONGLY supported LVT. But only as part of a comprehensive tax system, not as a replacement for large parts of the existing tax system.