Greens propose income and land tax mega-mergers - but will nation turn over a new leaf?

In another major simplification the Greens propose to abolish council tax, business rates, national non-domestic rates, stamp duty land tax, the annual tax on enveloped dwellings, capital gains tax on land sales, inheritance tax on land and income tax on land for owner occupiers, replacing them a Land Value Tax (LVT). Under the new tax landowners would be charged a proportion of the capital value of the land each year (estimated to be around 1.4 per cent of current values).

A Green Party government will apply a carbon tax on all fossil fuel imports and domestic extraction, based on greenhouse gas emissions produced when fuel is burnt. It will also apply a carbon tax on imported energy, based on its embedded emissions. And the Greens will raise the carbon tax rate progressively over a decade, rendering coal, oil and gas financially unviable as cheaper renewable energies rise up to take their place. The Greens support the transition to plantbased diets by phasing in a tax on meat and dairy products, the revenues from this part of the carbon tax recycled back into farming.

The manifesto proposes extra operational expenditure of £141.5 billion a year, paid for by a mix of tax reforms and savings measures. The Greens propose £94.4 billion of capital expenditure, raised through government borrowing. Surplus from its tax reforms and savings measures, alongside increased revenues from the new jobs created, will pay for servicing and paying down this extra borrowing, say the Greens.

The Green Party have one MP at the moment, Caroline Lucas, who has represented Brighton Pavilion since 2010.

Green Party manifesto tax proposals

Simplifying income taxes

• Merge employees national insurance, capital gains tax, inheritance tax, dividend tax and income tax into a single Consolidated Income Tax. This closing of loopholes will bring in an estimated £20 billion extra per year into the public purse. It will mean that all income is treated the same way for tax purposes.
• Tax income from investments/ assets at the same level as the taxation of income from work, through the Consolidated Income Tax. This will end the ‘injustice’ whereby people who work for their incomes are taxed more highly than those whose income is derived from wealth, says the Green party.
• Replace the income tax threshold with Universal Basic Income.
• End the double taxation of pension funds, which are currently subject to corporation tax and then income tax when paid out to individual pensioners.

Reforming property taxes

• Abolish council tax and business rates, replacing them with an LVT. The LVT will also absorb national non-domestic rates, stamp duty on land, annual tax on enveloped dwellings, capital gains tax on land sales, inheritance tax on land and income tax on land for owneroccupiers. The new LVT will charge the landowner a proportion of the capital value of the land each year (estimated to be around 1.4 per cent of current values).
• Ensure LVT is paid by landowners regardless of whether or not they live on the land. This will incentivise those who own empty properties to release them back into the housing market.
• Lift millions of renters and business tenants out of property taxes altogether, by shifting the burden of land taxation from land users to landowners. The Greens will legislate to prevent landowners passing these tax costs back to renters and tenants.
• Phase in the changes over ten years, with reliefs on offer. This will ensure that the vast majority of homeowners will face similar or lower levels of tax to that which they pay now.
• Protect those who have low incomes but who are ‘land rich’ with a right to defer the tax until the property is sold or transferred. Likewise, pensioners who are homeowners will be enabled to ‘roll over’ LVT payments until their property is sold, so they do not feel undue pressure to move.

Making big business pay its fair share

• Increase the rate of corporation tax to 24 per cent, in line with the OECD average. The party will advocate public country-by-country reporting and consolidated corporate tax across the EU to prevent profit shifting.
• Increase the Bank Asset Tax. This will counteract the huge levels of support previous governments have given the banking sector, through public protections, licenses and subsidies. The Greens will also close a loophole in the stamp duty on shares, by including share purchases of all values and new share issues within the duty.
• Establish HMRC as an independent agency of government, answerable to Parliament. This will remove the power of politicians to ‘strike secret deals’ with powerful corporations and individuals.
• Entrench the anti-avoidance principle in UK tax law and oblige banks to provide information about companies automatically to HMRC.

Combatting Tax Avoidance

• Close down corporation tax loopholes by widening the definition of ‘profit’ to cover dividends, share buybacks, additions to cash holdings, payments to parent or subsidiary companies (both onshore and offshore), and other distributed income.
• Clamp down on tax havens internationally and, domestically, require offshore companies to reveal their beneficial ownership before being accepted as competitors for publicly funded contracts.
• Abolish the rule that allows nondomiciled residents not to pay tax on foreign income.
• The Greens want to remain in the EU and push for more co-ordinating crackdowns on tax avoidance and evasion, ‘so no one seeking to hide from tax rules can do so anywhere in the EU’.

Green New Deal for incomes

• Phase in the introduction of a Universal Basic Income (UBI) sufficient to cover an adult’s basic needs. UBI will be an unconditional payment, paid to all UK residents regardless of employment status.
• Replace most income-related benefits with UBI (except for the additional benefits described below). Replacing a large range of variously means-tested benefits with one unconditional payment will simplify and streamline the system, the Greens say.
• Ensure nobody will be worse off. The adult rate of UBI of £89 per week will result in around a six per cent increase in disposable income over five years for someone in fulltime work and paid the average salary. It is the party’s firm intention to increase in particular adult rates at regular intervals during the first full parliamentary term. Include additional payments above the basic adult rate for some groups of people.
• Draw directly on income from the carbon tax to help fund UBI, thereby ensuring that the proceeds of the tax on carbon emissions help meet the cost of enabling people to make the transition to a ‘carbon free future’.

(In the appendix to the manifesto, the Greens say the cost of proposed UBI regime (including supplements and free childcare): £86.2 billion to be met from tax changes and savings revenue)

Supporting small business

• Give small businesses access to lending at affordable rates, by helping to establish a network of regional mutual banks.
• Further free up funding by introducing credit guidance for traditional banks, requiring them to increase their lending to small businesses and businesses focussed on the sustainability transition.
• Grant 15 per cent of government contracts to small and micro businesses.
• Reduce VAT on food and drink served in pubs, bars and restaurants, on hotel bookings and on theatre, music concert and museum and gallery tickets.
• Increase the Employment Allowance to £10,000 (currently just £3,000) per year.

Other tax relevant announcements

• Lobby against the international rules that prevent action being taken to tax international aviation fuel.
• Extend the successful tax on plastic bags to cover plastic bottles, single-use plastics and microplastics, and extend plastic bottle deposit schemes.
• End the sale of personal data, such as health or tax records, for commercial or other ends
• Ending the Help to Buy Programme, ‘which mainly served to drive developer profits’.
• Abolishing the heavily subsidised current Right to Buy Programme. The party will instead allow councils to set discounts locally and retain 100 per cent of receipts to reinvest in new and existing homes.

From the Green party manifesto: Additional revenue generated from tax changes (per year): Carbon Tax: £76.7 billion (excluding Carbon Tax revenue from farming sector, which is restricted for spending on the farming sector only) Simplifying income taxes: £21.7 billion Increasing Corporation Tax to 24 per cent: £12 billion New taxes on banking: £5 billion Tax avoidance and evasion crackdown: £3 billion Reduction of tax relief on pension contributions (all relief at 20 per cent/basic tax rate): £6 billion Reduction of tax-free drawdown on pensions to £40,000: £2 billion Legalised drug taxes: £8 billion Increased alcohol duties: £3 billion (Minus VAT reduction for leisure, eating & drinking out, sports, recreation, creative arts & entertainment and household repairs sector (£9.5 billion) Minus increase in Employment Allowance from £3k to £10k (£3.5 billion). This leaves total extra revenue generated by new tax regime: £124.4 billion

You can read the Green Party manifesto in full here.

 By Hamant Verma

(Reports on the other parties’ manifestos will appear in this blog section as the manifestos are published.)