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No, the people who would pay the bit-tax are the
people who now only have the internet for their lives because the rest of the
world is too expensive. It is the poor who always pay the taxes,
whether in rising prices or in sales tax. Anything else is
just sleazy. When will you reconsider the meaning of the word
"productivity" in terms of mega thinking rather than
minimalism. Do you always want to listen to the same wallpaper
music all of your life? That is why Philip Glass and Steve
Reich are so correct and that is also why most people either "get it" and listen
for personal understanding or can't stand the fact that it shows how transperent
their pants are. In short, you either listen and say, "That's
right" or you say they are just too dumb to stand and they say, "You got
it and I got it from you!"
REH
----- Original Message -----
Sent: Thursday, May 29, 2003 8:57
AM
Subject: RE: [Futurework] Exit ramp for
Europe
This
is why we need a tax system which is congruent with and takes advantage of a
networked economy. I have argued for such a system with the "bit
tax" There are other approaches but the bit tax would be a good first
step at getting at the productivity of networks for the public
purse.
As
to tax havens, there is slow, very slow move reform these places. The
political will is lacking since, I guess, the rich who contribute to political
parties have given the slow down signal to politicians. Too bad, since
the tax havens know that a crackdown is in the works. And have known for
some time. Reforms just seem to die in committee.
arthur
A French
think-tank, the Institut Francais des Relations Internationales, thinks
that, for Europe, "A slow but inexorable movement onto history's exit ramp
is foreseeable." At the same time, those who want a United States of Europe
have brought forth a Constitution which is now being fiercely debated. This
is the background for an excellent article by Hamish McRae, the economics
editor of The Independent. For those interested in Europe or of the likely
scope of government welfare spending generally in the future, the following
article from yesterday's paper will be well worth
reading.
<<<<
EUROPE CAN'T BUCK THE
MARKET
Hamish McCrae
When economics and politics clash,
economics usually wins. Whether or not the proposed European constitution
means that Brussells will have a say over British taxes -- and there is so
much obfuscation that I don't think it is possible to know at this stage --
economic pressures seem likely to push down Europe's taxes to UK levels,
maybe beyond. The politics may be for higher taxes but the economics are for
lower ones.How so?
Well, the pressure on governments across the
whole of the continent will be huge for the next two generations. Government
will be under tremendous pressure to spend more but also will find it harder
and harder to raise revenue.
This is the result of the clash between
two forces, demography and mobility. The first story can be told quickly.
Continental Europe will become, after Japan, the oldest region in the world
in terms of the proportion of people over the age of 65. The UK becomes
older too, but at a rather slower rate. The effect of this is that, whereas
there are currently just under three workers for every pensioner in Germany
and France, in another decade there will be only two and a quarter. In 2050,
when young people now entering the workforce are drawing their pensions,
there will be fewer than one and a half workers for each pensioner. In Italy
and Spain the ratios are even worse, for there will be more pensioners than
workers by 2050. In the UK they are rather better: we are, as a
country, getting older, but more slowly than the Continent.
European
governments are well aware of the implications of these changing ratios on
their finances for, not only will the bulging ranks of pensioners need their
state
pensions, they will also be a charge on health and care budgets.
However governments find it hard to make even modest changes. The present
bout of French
strikes is one response to minor revisions to pension
entitlements. If the protesters knew the extent to which their benefits
would have to be cut, they would be rioting, not striking. The big fights
are still to come -- and if the pressure is serious in France it will be
greater still in Germany, Italy and Spain.
If demography adds to the
cost of government, mobility cuts its revenues. One form of revenue, company
taxation, is already in serious decline, as corporations have started to
move their activities to low-tax countries. For the winners this has been
wonderful. Ireland has transformed its economy by attracting mainly US
companies with tax holidays. It does not get revenue directly from the
firms, but it does from the people they employ locally.
The next
stage looks like being the movement of company headquarters. There have been
examples of German companies moving to Switzerland and US ones to Bermuda.
But the greatest gainer may well be the States, with this administration's
new plans to cut tax on dividends.You can see why the European Union is
anxious to have a reasonable measure of company tax harmonisation to stop
Ireland scooping more than its share of Europe's pool of foreign investment.
But the big game is not within Europe; it is between Europe and North
America and it is hard to see much tax harmonisation there. For a firm such
as DaimlerChrysler or GlaxoSmithKline, the legal headquarters could
rationally be on either side of the
Atlantic. If the tax advantages
became big enough, they could move.
Over the past 10 years there has
already been a sharp fall in company tax rates. This,
I suspect, is a
trend that has only just begun. Company taxes are, however, only a small
proportion of government revenues. Here in Britain the rate is less than 8
per
cent. The big money comes from income tax (including social security
contributions) and consumption taxes, in particular VAT. So what matters is
where people earn money, and where they spend it.
For the very rich,
the choice of where to live is already very largely determined by tax. Tax
havens including Monaco and the Channel Islands do a great business. There
are people who live in the Channel Islands but work, in effect, a full week
in
London without, technically, ever being there for tax
purposes.
Much more significant is the mobility of the young. You can
see this best in London,
which has become a magnet for young
professionals from all over Europe and indeed North America. The South-east
of England has the largest expatriate professional community on the globe.
Continued professional inward migration is one of the reasons why me UN now
expects the population of me UK to grow by 12 per cent over the next
half-century. This compares with a rise of 8 per cent in France and falls of
4 per cent and 22 per cent in Germany and Italy.
Tax is not the only
reason for professional mobility but it is a significant one. Young
professionals are a hugety attractive proposition for any country They bring
skills, they create growth, they pay tax both on their income and their
spending -- and they are not big burdens on social security systems. I
suspect that one of the main areas of competition within Europe will be for
just these people and, of course, with the EU's single job market they are
free to move anywhere.
If that is great for Britain, it is not so
much fun for, say, Italy or Germany. The nigh-eartimg young move out,
leaving an even greater burden on the taxpayers who stay. The only way to
keep them will be to cut taxes. And the more the European economy becomes
like the American one, the greater the mobility of labour.It follows that if
Europe is to become a more dynamic economic region, the result will be
population movements that force down tax levels everywhere.
You can
see early signs of this already. In Sweden, the highest-taxed country in
the
world, spending has afready fallen from its 1993 peak of 67 per cent
of GDP to about 52 per cent. The top marginal tax rate is down to about 60
per cent (it varies depending on where you live), me same as Britain in the
1980s.
In a more or less closed economy, countries are free to choose
the size of the state sector -- if they want to pay higher tax and get
better services they are free to vote for that But in an increasingly open
economy this choice closes off. It is already, in effect, closed for company
taxation. It is starting to dose for personal taxation too.
So
whatever the provisions of the European constitution on tax powers, the
reality will be set by the market. Of course it can try to buck that market.
The result could then be rather on the lines suggested by the Paris
think-tank, the Institut Francais des Relations Internationales. In its
recent report World Trade in the 21st Century, it warned that the EU,
even after enlargement, might shrink by 2050 from its present 22 per cent of
the worid economy to a mere 12 per cent. "A slow but inexorable movement
onto history's exit ramp is foreseeable." It painted other somewhat more
optimistic scenarios -- but it makes a sombre backdrop to grand ideas about
the European constitution.
>>>>
Keith
Hudson, 6 Upper Camden Place, Bath, England
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