Economy
Income and Corporation Taxes
- Personal Income Tax to be abolished in second financial year of a Libertarian government.
- Corporation Tax to be lowered to 10% to encourage business and commerce to be based in the UK. The Party is committed to investigate the viability of a 5-year exemption from Corporation Tax for start-ups.
- Inheritance Tax and Capital Gains Tax abolished in first Libertarian parliamentary term.
VAT
- Replace VAT with national and local Sales Taxes.
- Local Sales Tax to fund and be set by County Authorities, and to replace Council Tax.
- Business to business transactions paid between bank accounts of registered companies will not be subject to Sales Tax.
- National Sales Tax rate initially set at 17.5%, as a direct replacement for VAT.
Green Taxes
- Adoption of the IPCC SRES A1 framework in accordance with the UK being a Highly Industrialised Nation.
- Before any new taxation is introduced, the existing taxes, subsidies, levies, duties and other mechanisms need to be reviewed. Primarily, environmental issues should be addressed by the personal and economic action of the individual, not pre-emptive taxation by the State.
- Roll back any binding international agreements that result in fines or taxes to any supra-national or foreign entity, including the EU, UN and IMF. An example here is the "landfill tax".
QUANGOs
- Entities with legal/statutory powers to be formally recognised as State bodies and returned to direct oversight by the Government and Civil Service.
- Systematically review the remaining funding of QUANGOs, with the aim of its withdrawal. A comprehensive report on our QUANGOcracy, published in 2008 by The Taxpayers' Alliance, found that:
- In 2006-07, taxpayers funded 1,162 QUANGOs—at a cost of nearly £64 billion, equivalent to £2,550 per household.
- QUANGOs now employ over 700,000 bureaucrats.
- Even on the Cabinet Office's restricted definition of what constitutes a QUANGO, their cost has increased by 50% in 10 years.
Bank of England
- The independence of the Bank of England should remain.
- The division of powers between the FSA, The Bank of England and the Treasury to be centralised into the BoE to avoid any gaps or duplication.
- BoE charter used to regulate the powers and remit of its officers.
Intervention
- As a general principle, the State should not intervene in the finance industry unless to ensure transparency and protect against fraud. The outcome of our current monetary policy review will dictate how much State intervention our Party believes is necessary.
- It is not the duty of the State to underwrite private financial entities or absorb risk as this would encourage irresponsible and reckless investment and unsustainable business practice.
Public Sector Borrowing Requirement
- Aim to reduce Government borrowing to zero.
- A report will be commissioned to investigate how best to handle the existing vast national exposure to PFI debt.
Minimum Wage
Abolish statutory minimum wage to encourage economic growth, and to allow individuals to escape the "welfare trap".
It has become widely accepted in Britain that the minimum wage is a just and necessary piece of legislation that protects workers from exploitation and that generally makes people better off. It is portrayed as a humanitarian and benevolent law. This is far from the truth.
The first question to ask is: why might we need a minimum wage? Who actually earns minimum wage and thus might be earning less without it? Most of those who earn minimum wage have either recently left (or are in) education, previously retired, recently immigrated or are in some sort of training, such as an apprenticeship. None of these groups tend to remain on minimum wage for long, and thus would not remain on wages below the current legal minimum for long if this limit were removed.
Those who are in or have recently left education lack the skills and experience to command higher wages. As they gain these things (or when they get their qualifications or degree) their wage rate will rise. Being able to get a low paid job while in education, or when one is young and in need of experience, is vital.
Older people who have retired often go on to take on low paid jobs, sometimes as something to do, and sometimes as a way to bolster their other sources of income (primarily pensions, in most cases). For these people, they are either not working for the purpose of gaining income, or the job is not their only source of income. In addition, thought it is dismal to speak of it, they tend not to remain in such employment long due to old age or, sadly, passing away. Despite this, being able to take such work is of great importance to older people, who cannot take high paid jobs but still want to be able to work.
Some immigrants are highly skilled and can command high wages, like most Britons. But many lack these skills and must work for low pay until they can gain these skills. In many cases immigrants will start off in low paid work and move up the economic ladder to more profitable employment. This first rung is essential for allowing immigrants to develop and flourish. It is important to remember that even wages below our current legal minimum can offer a higher standard of living for many immigrants, especially when combined with the availability of cheap, high quality goods and services in Britain, compared to many of the countries from whence immigrants originate.
Those in training are in a similar situation to those in or who have recently left education - they don't have a high degree of skills yet, but they will do soon. They are also receiving a significant lump of their pay in the form of what is essentially subsidised training; whilst the monetary payment may be relatively small, the total benefit from such employment is considerably greater.
Of course, it is not just that the minimum wage is a neutral policy that does no good, it is a bad policy that causes harm. Whilst minimum wage laws may increase the wages of a lucky few, they do not create a net benefit. This is because employers cannot produce money from thin air; by increasing the price employers must pay for their labour government necessarily reduces the quantity of labour that employers can afford to buy. Some workers will get higher wages, but there will be fewer jobs available and thus greater unemployment. What is rarely explained is that minimum wage laws are a prohibition, they ban most low skilled workers from getting a job, creating a situation where employers may want to employ workers, and workers may want to be employed, but the law prevents them from doing so. Supposedly, this is for their own good. It is better, they say, that they be forced from employment at the barrel of a gun and on to state benefits. To make matters worse, this dependence on benefits is often long term: because low skilled workers need to work to gain skills and experience, if they are banned from working they can't gain what they need to command higher wages. Instead of short term low paid employment, people find themselves on low income benefits long term.
However, the minimum wage is not merely a problem for low skilled workers, it is a problem for all of us. Whilst most Britons will not be directly affected by the minimum wage because their market wage rates are higher than the minimum level, the indirect effects are still felt. With the increased cost of labour employers can't afford to employ as many workers as would otherwise be the case. With fewer workers, they produce fewer goods and services, and this fall in supply leads to higher prices. This even feeds back to the detriment of those forced onto benefits by the minimum wage law, because they must suffer higher prices in addition to lower incomes.
The Libertarian Party do not believe that prohibiting workers from working, from gaining skills and experience, makes them better off. We believe in the voluntary association and cooperation of free individuals and that such associations make people better off. As such, we support the immediate abolition of the minimum wage as a vital and necessary measure to improve the lives and well-being of the ordinary, working people of Britain.
National Pay Awards
Abolish national rates for local authority and local body (e.g. police) pay. This will allow local communities to determine their own priorities in their local area.