A Millennium Party government; winning the next General Election
The LibDem slogan, A Stronger Economy; a Fairer Society is putting the cart before the horse, so to speak. How can a society be “fair” when it is based on an economic system that is based on unfairness? In other words an economy based on massive income inequality. It will not happen. If the party does not take a massive step to alter the prevailing neoliberal economic ideology on which the prevailing western neoliberal economic system is based, (financial deregulation, privatisation and massive regulation of the citizen), there will be no Liberal Democrat government in 2020.
“Don’t be afraid to take a big step. You can’t cross a chasm in two small jumps”. David Lloyd-George.
I do not think the Liberal Democrat party will do what is proposed here. Which is why the Millenium Party has been created. What is listed below is what the Millenium government will do; I do not see the Liberal Democrat party or other parties of the political establishment implementing these policies.
What the Liberal Democrat party must do to win the next General Election is to;
- Eliminate zero hour contracts for employees.
- Create full time (35 hour) week jobs.
- Reduce loan costs, e.g. PayDay Loan interest charges.
- Reduce income inequality.
To do 1, a Liberal Democrat government must put into legislation an overtime rate of + 30% of the hourly rate paid on any hours or part of an hour that is worked above 35 hours OR THE CONTRACTED HOURS, whichever is the lower. This creates, in systems terms, a causal loop whereby a business in order to keep costs down would need to recalculate the man-hours required in terms of maximising the number of people working a 35 hour (full-time) week.
To do 2, a Liberal Democrat government must change the Corporation tax rules to give businesses “an earned profits allowance” similar to the personal tax allowance, that is between 1% and 100% of the annual wage bill of the lowest paid full time (35 hour week) employees.
To do 3, a causal loop must be created between the interest rate charged and the rate of Corporation tax payable. For example, if 2% Corporation tax was payable for each percentage point interest charged, a credit card company that charges 30% AER would be liable for a 60% Corporation tax rate. Loan interest of 50% means that that any profit would be taxed at 100%. Therefore to avoid this exorbitant rate of tax, financial institutions must introduce an “administration charge”. Competition amongst the financial institutions would be based on the combination of low interest rates and low administration charges.
To do 4, the next causal loop to create is a linkage between the wage differential ratio and the rate of Corporation tax charged. This is currently set at 20%. However, if the Corporation tax rate for financial institutions is set at e.g. 2% per percentage point of interest charged by a financial institution such as a credit card company or a payday loan company, this would drive down the cost of loans and also mortgages. A credit card company that charges 30% interest would be liable for a corporation tax rate of 60%. The company would either have to reduce its interest rate charges to reduce its tax bill and perhaps add an administration charge to the cost of providing a credit card. These charges would be more easily compared across the different loan providers while at the same time driving down the cost of credit.
To do 4, prior to the referendum result, I would advise that the steps necessary should be first legislated into EU law. Businesses in member states would then be able to choose whether to be subject to the new EU laws or not. It would be a free choice.
However, since the Brexit vote, it will be up to a UK government to take the lead and do this, whatever the political colour of the government.
These steps are as follows; to legislate for the creation of three basic “legal persons”, i.e. businesses. The first is an equitable PLC (eqPLC); the second is a social enterprise PLC (sePLC); the third is a community interest PLC (ciPLC). Of course, a UK government and/or its devolved governments and assemblies; the Welsh Assembly or the Scottish parliament could legislate the system into existence.
These new types of businesses would be subject to a statutory wage/income differential. These would be 20 to 1 for the eqPLC; 10 to 1 for the sePLC and 5 to 1 for the ciPLC. These new types of businesses would be subject to a new form of contract law which I call Mutually Agreed Contract Terms law (MACT law).
The reason why businesses would want to form such an organisation is because
Shareholders’ dividends would be zero rated for tax purposes. It was reported in the Economist some years ago that it was estimated wealthy Americans kept $15 trillion dollars offshore. That should be sufficient to refloat the Greek economy with the new economic system.
The rate of Corporation tax payable by these new types of businesses would be causally linked to the actual wage differential paid by the business. For example, an eqPLC that pays an actual wage differential of 8 to 1 would be liable to a Corporation tax rate of 8% instead of the standard 20%.
The third reason why investors and pension fund holders would want invest in the new types of businesses is that the new form of contract law would ensure that the cash flow of reputable businesses would be ensured. Money found to be owing to a business through a breach of contract would be reimbursed by the court. This would be repaid to the court by removing the personal tax allowances of the board of directors in the case of a company defaulting or the individual customer if the individual has defaulted on payment of a bill.
In this scenario, in 2. an equitable PLC (eqPLC) would pay less Corporation tax than a social enterprise PLC (sePLC). The political arguments about whether a society should be based on (equitable) Capitalism, Society (Socialism) or Community (Communism?) would be merely based on the distribution of the different types of the new PLCs that exist in the new economic framework of a country.