Untax Business, Uptax Nature
By Frank de Jong
Well, the federal political parties are saber rattling again, threatening an election over the corporate tax cuts which will be in the upcoming budget.
The Conservatives are sticking with their plan to roll back corporate taxes from 22% in 2007 to 15%, that corporate tax cuts are good for the economy…, while the Liberals say this is a bad idea in the face of a $56 billion deficit. The NDP are of course lined up behind the Libs.
Both sides are half right and half wrong, giving the Green Party an excellent opportunity to promote our economic program.
Harper is correct, corporate taxes are bad for the economy. Taxes on productive activities are “dead weight” taxes which make some marginal productive activities uneconomical that otherwise would be viable, creating jobs.
But the Libs and NDP are also right, that the gov should not run a deficit, should not mortgage our future, nor should it cut programs that hurt people, especially the vulnerable, and lower the quality of life.
Green economic theory agrees that governments should untax businesses to encourage economic activity, jobs, providing goods and services. There should be no taxes at all on businesses. We want businesses to be successful so why would we punish them with taxes??
But green economics is socially progressive and fiscally responsible, so clearly governments should not run deficits and governments need revenue to provide the programs we need and want.
What to do?
The Green Party solution is to untax people and businesses and instead generate needed revenue by collecting fees and levies on the use and abuse of nature. This approach will right-price nature, preserving it, and at the same time encourage businesses to be more resource efficient (conservation) and labour intensive (more jobs).
If the next federal election is fought over corporate tax cuts, we will have an excellent angle, a very strong platform.
Our slogans can be: Pay for what you burn, not for what you earn. Pay for what you take, not for what you make. The government should collect unearned income, not earned income. Government shouldn’t punish someone for having a job or punish a business for being successful!
By untaxing jobs and business and instead collecting “economic rent” (revenue without a corresponding cost of production), government would be putting renewables on a level playing field with fossil fuels, would make walkable communities attractive compared to sprawl, and bias organic, local agriculture over industrial/factory farming.
Land Value Taxation comes to Ireland
A very good development coming out of the Irish meltdown, the introduction of nation-wide land value taxation policy. http://www.thejournal.ie/government-announces-new-site-value-tax-from-20…
Site Value Taxation (or Land Value Taxation) is like the property tax except that it levies only the value of the lot underneath the buildings, not the value of the buildings (improvements). It is a tax shift, not a tax grab, since other taxes will be reduced.
One benefit is that it doesn’t punish those who renovate, expand or who build affordable housing. In Canada, multi-unit and commercial buildings pay 4 – 10 times the rate of detached houses.
Another is that it “right prices” land which will incent efficient land use, reducing sprawl. A vacant lot will carry the same charge as a lot with a building on it, encouraging people to build or sell, rather than hold land out of production for speculative purposes.
Also, assessments are more accurate and simpler when only the lot is assessed, and not the buildings, a problem which hit the papers in Ontario.
LVT is not just for the municipal level. The Ontario and Canadian governments should generate most of their revenue from land value taxes plus levies on resource use and pollution, in lieu of income, business or consumption taxes. Income and business taxes kill jobs and damage the economy, but taxing nature doesn’t.