The Unitax alternative to VAT or other taxes, national or local, is absurdly simple: you just measure the net input of energy in units such as gigajoules (eg 15,000,000 GJ per year) into any geographical area and divide it into the public sector budget for that same area (eg £40m per year). This yields a Unitax of so many pounds sterling per gigajoule (eg L2-67 per GJ, that is about 39 pence on a gallon of petrol, for an average UK rating district; and all domestic and commercial rates are abolished). Unlike sales, income or local council taxes, the Unitax is administered at the very few initial energy-supply points (and at points of import or export). Energy is already measured at the points of import and export, so there is little new bureaucracy and we are dealing with a bulk commodity which it is difficult to hide - so evasion is difficult while economies are to be welcomed. The Unitax works its own way through the systems of distribution and consumption without further paperwork, yet the amount paid is inescapably linked with the standard of living. That is the gist of it.
Two further points arise. First, this is not just an ‘energy policy’. It is true that we will ‘save it’, cut waste (and pollution), recycle, find alternatives, revolutionise transport, and the heat-pump will become economically viable. Because Unitax is raised at source - where the prime energy first has a price placed on it - it becomes a constituent of all other material resources: plastics, steel, fertilisers, paper, electric light - hence the term ‘Resource Economics’. Nor is it a system of rationing for scarce commodities, although it may do that - I think it will moderate some of our more intensive and artificial uses of materials and the way we use capital intensive methods to oust labour. But energy must continue to flow where there is life; likewise we must raise taxes. Even if energy were abundant and free, therefore, Unitax provides an essential social valuation of resources linked at all times to the quality of life.
Secondly, this is not just a welfare policy. It is true that the proposal includes a provision of a non-selective Basic Income for all citizens - at least in the developed stages of Resource Economics. This is because a certain amount of energy consumption is required to support life. Consumption above this ‘threshold’ will then vary with the quality of life: the higher the lifestyle, the more Unitax that is paid in that consumption. This threshold is the point at which the ‘regressive’ nature of so-called energy taxes becomes ‘progressive’ and the Basic Income is calculated as its energy equivalent (about L55 per week for all adults if all other taxes - including the funding of the Basic Income itself - were today replaced by a Unitax of about L15 per GJ). The Basic Income does away with much painful bureaucracy: replacing pensions, the dole, child allowances, student grants, etc. Such a distributive mechanism also holds out the solution to many modern problems - not least ‘unemployment’ - gives ‘wages to housewives’, minimum income, and paves the way to ‘no-fault’ compensation for loss and, important in this technological age, a copyright income. The ‘poverty trap’ disappears because you keep all you earn without forfeit and, of course, there are neither ‘Black Economy’ nor Social Security fiddles. Readers may also see the solution to the EC CAP problem: a Basic Income to farmers would allow free-market food price and distribution without intervention.
‘It is quite wrong that revenue is raised on price or earnings or wealth; it should be derived from consumption which is prolific, not from the enterprise of labour and investment which is limiting’.
The Resource Economics Proposition has been designed as a comprehensive economics system. Indeed, it has yielded the proof of where classic economics have become screwed up and shows how national budgets may be balanced and world imbalances corrected. This age is characterised by ‘consumerism’ and needs this new set of rules. In context, it is quite wrong that revenue is raised on price or earnings or wealth; it should be derived from consumption which is prolific, not from the enterprise of labour and investment which is limiting. The one common constituent in all consumption is energy. It is not labour-added value that should be taxed (as by VAT), but energy-added value (by Unitax) if you want a happy economy.
Incidentally, some people think that if you live in a cold climate you would pay more Unitax. Not so. Because more energy is used (for heating), the tax is distributed more thinly. For example, if you double the consumption, the Unitax rate is halved yet yields the same revenue. So, broadly, everyone pays the same Unitax. Unitax is not like an old-fashioned energy tax and this dynamic mechanism also adjusts for changing efficiency of consumption as time goes on.
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