Green group would use tax to battle pollution

THE GEORGIST NEWS Comments: In recent years, Friends of the Earth chapters in several different nations have communicated favorably about Georgist economic policies, such as the two-rate property tax. Alanna Hartzok found this July 13 article, originally appearing in the Guernsey Press and Star, about another Friends of the Earth group joining the geo-bandwagon. Here is the text.

** Radical proposals for tax reform have been submitted by Friends of the Earth Guernsey

It calls on the future taxation strategy to consider diversification from the finance sector, abolition of income tax, an increase in fuel duty, an overhaul of the energy tariff, a land tax and a so-called basic income for all.

The environmental pressure group believes that finance has become Guernsey’s golden goose, but that as a source of tax revenue, it is particularly vulnerable to the continuing hike in oil prices to the dreaded $100 a barrel peak.

‘It follows the same old pattern of backing just one industry, such as with the grapes and tomatoes, both of which collapsed,’ said Mike Johnson, the report’s author.

He admitted that the effect on welfare and charitable activity of a move away from finance had not been taken into account in the proposals.

Mr Johnson said this was because the amounts involved and the motives for charitable activity by the finance sector remained unclear to him.

‘We also have a regressive income tax system, which penalises the low-paid workers. By shifting the burden of taxation into different areas like fuel, pesticide, waste disposal and energy, local workers could be re-employed in horticulture and tourism.’

The submission says migratory labour is a strain on the island’s economy and infrastructure.

Mr Johnson said he believed it was possible that the two sectors – prime candidates for heavy environmental taxation – would survive if local employees paid little or no income tax.

The group also proposes quadrupling fuel duty to 27.2p a litre and abolishing vehicle excise duty. This would be fairer on those on low incomes and reflect the damage done by congestion and pollution.

‘We have a rather strong motoring lobby in Guernsey. There are far too many assumptions about the right to drive, and the rights of those who get around in other ways are ignored,’ he said, adding that motorists’ behaviour would change with higher prices.

The report cites traffic as the number one turn-off for visitors.

Friends of the Earth wants to alter consumer behaviour through changing the energy tariff structure – penalising heavy use rather than rewarding it as in the present pricing system. Mr Johnson said that the cost imposed on energy suppliers would be offset by efficiency.

‘People would not be paying very much because they wouldn’t be using very much. Energy utilities should be allowed to pass on the cost of investment if it saves energy, so it would be profitable for them.’

The group also wants to impose a land site value tax to help offset income tax.

‘I hope the States look closely at this because it has been successfully done elsewhere, especially Australia, where it has been welcomed by businesses and residents.’

The most radical proposal is introducing a basic income, to which all would be entitled, whether in paid employment or not. Paying everyone £275 a week would gradually phase out the island’s benefit system.

Mr Johnson, who spent a few weeks writing the report, denied this would act as a disincentive for people to work and said it would help those who did unpaid work at home or in the voluntary sector.

- from THE GEORGIST NEWS Volume Eight, Number Two August 1, 2005