Welcome to Sputnik and orbiting the world with me George Golloway–
And me Gayatri. Death and taxes are the only two inevitabilities
according to Benjamin Franklin but what if the taxes are contributing to the death?
It's a common place that we need taxation to pay for civilization but the form and rate
at which we are taxed can cost lives. Just in the last month from Lebanon to Ecuador,
Taxes sparked big fires. Dominic Frisby is a money writer with a difference,
he's also a comedian. He foresees, I suspect the end of money, at least as we know it and
maybe the end of taxes too. He’s the author of a brand-new brilliant book, Daylight Robbery
and he joins us now. Dominic welcome back on the Sputnik.
Thank you very much. Let's start with the book though there's much
else about you to admire and to probe. It’s a brilliant title for a start and I've always
been of the view that it might be a lowbrow thing to say but the title of a book means
a lot. Well it does. You're very kind and the title,
the expression “Daylight Robbery” actually comes from the window tax, that's where we
get the expression from and when they were- Because we once taxed for a window and beards
so you and I would have been– Henry the 8th taxed beards and also Peter
the Great in Russia, he felt that Russians were a bit backward and he wanted to modernize
Russia and so he levied a tax on beards. And if you had carried a beard and you hadn't
paid the tax, you would be publicly shaved. People just come up and shave you or you had
to pay the tax and you had to hang a token from your beard to prove you'd pay the tax.
And the token said, “The beard is a superfluous burden.”
Extraordinary, that's one of the great things about your book in that you give us the history
of Taxation. Most people, I suspect, perhaps me included imagine taxation to be a relatively
modern thing. Taxation is as old as civilization. The very
first records of writing we have, are tax records and the very first taxes were levied
in ancient Mesopotamia called “Esretu” which was a tithe when you gave the tenth
and the irony of the tithe, the tenth is common to pretty much every ancient civilization
there is. And it's thought that the number was a tenth
because we have ten fingers on our hands. It’s a sort of a natural number easy to
calculate but probably the idea of this sense of duty to the greater collective probably
existed in the hunter-gatherer societies that predated civilization.
So you concede that taxation as an idea does flow from that collective responsibility?
Absolutely this is the essential dilemma, on the one hand, tax is theft because you
are having things taken from you, forcibly taken from you which is yours and on the other
hand taxes are the price we pay for a civilized society.
In fact those are the words that are inscribed on the outside of the IRS Building in Washington
DC and this is the attempt- - there's always a huge moral argument and Churchill described
taxes as a necessary evil and like I say there's never been a civilization without taxation.
Taxation of some kind is inevitable, there's this incredible relationship through history
between war and tax because without tax you can't fight wars and taxes paid for every
single war in history, either during the event or after.
You plunder and then you tax the newly conquered territory but at the same time wars have enabled
leaders to levy higher amounts of Taxation. It is very hard to levy new taxes in peacetime.
There’s a long history of leaders, Margaret Thatcher a great example trying to levy new
taxes and it backfiring on them. Mansion tax was another idea, it is very hard to levy
new taxes in peacetime, you normally need some kind of crisis for the new tax to happen.
So there's this long relationship between tax and war.
Aristotle's idea that the richest among us should be no more than three times as rich
as the poorest among us would of course reduce the need for tax wouldn't it? And isn't the
argument about the method of taxation- - you mentioned Mrs. Thatcher I was myself one of
the leaders of the refusal to pay the poll tax
Good for you. I was present in Trafalgar Square when metaphorically
in a way she fell, she falls a little later but it did bring her down and the problem
with her tax, the poll tax was that it took no account of your ability to pay.
This is the idea of progressive taxes where you pay- - the more you earn, the more you
pay and hers was a flat rate of poll tax. : The Duke paid the same as the government
emptying his bins. Yes and this was a great scandal but what
actually brought Thatcher down with that poll tax was she imposed it and it was to be paid
to your local council. And the idea was, she was trying to- - she hated all the council's,
this was the era of the Loony left and [unintelligible 00:05:49] [Herring?] gay all the crazy stuff
that went on. Some of those was quite good by the way but
go on. You know what I mean. And she was trying to
bring greater accountability to councils because they were spending way more than they were
taking in and she thought the poll tax- - because it was a transparent tax- - she thought it
would do that but the problem was it was so transparent that the poll tax went up and
became incredibly high and became hugely unjust and the left actually- - she was trying to
use it to bring accountability to the left-wing councils but it backfired on her because the
left used it as a means to bring her down. And now we've got riots everywhere in the
world over taxes. The Lebanon movement, the Julie Jean, the Ecuador, these were all responses
from the population to new taxes. Every single revolt and revolution in history
has been an uprising at some kind of injustice caused by an equitable taxation. No taxation
without representation, the American Civil War, the French Revolution, excess tax is
paying for the decadence of the aristocracy. The Philippine Revolution began with the cry
of Pugad Lawin where he exhorted citizens to tear up their tax certificates and that's
because tax is a system of rule, it's a system of control and tax is power.
If a leader loses control of his tax revenue, he loses control of his power, whether it's
a king or an emperor or a government as in today, taxes, control and power. And so I
look at it the other way- - every war has been paid for by taxes, every revolt was a
rising up against some kind of taxes. Every conquest was an attempt to take control
of the tax base, the land, the labor, the produce and the profits. If you look at a
zombie film, there's always this idea of the zero patient, Patient Zero which is the virus
where the disease starts. And the zombie film that the trope is often
that you've got to the zero patient either to kill him to kill off the virus or the zero
patient will give you the antidote, the cure. And in a Western civilization if you think
of the terrible things that are going on in our society, the tax system is Patient Zero
and if a politician really wants to change the world, forget fighting this and that battle,
go straight for the tax system because that's where it all starts.
If you were in charge what would you do? I would reduce income tax dramatically because
we have a society where 50% of government revenue derives from income taxes and we're
very skewed in favor of asset ownership against- - because assets, largely speaking, aren't
taxed. We don't tax land, so this creates this huge
inequality. If you start out with nothing in life, the one thing you've got is your
labor but we tax it constantly and heavily. And so it's very hard for somebody to make
something of himself through his labor alone, you have to kind of own a house or own assets
or own equities, we're too geared around asset ownership.
So I’d shrink income tax, I would also shrink the tax code, it is way too long. In the UK
the tax code is 10 million words, to put that in some kind of perspective that's 14 times
the length of the Bible. The longer the tax code- - it's more words than most people read
in their entire life and I promise you nobody has read the entire tax code.
It trebled in length under Gordon Brown, George Osborne came to power promising to simplify
it, it doubled in length again under George Osborne. It’s out of control machine and
we need to shrink it, as the longer it is, the more loopholes there are.
One group has the ability to find the loopholes and exploit them, the rest of us don't and
so the result is this inequality is created. So much of inequality in the Western world
is created by our tax system. But it also covers it right?
Yes but if shrink income taxes, I would get- - I'm a libertarian so I'm a believer in low
taxes anyway George will probably bite my head off for saying that but that's what I
think but I would get rid of a load of taxes and I would introduce one new tax which is
the old Henry George tax based on the value of land.
This is the hardest tax in the world to evade. The big problem that governments in the world
have in the economy going forward is the problem of taxing the globalized intangible economy,
the economy of the internet because where is it based? Where’s this IP? Where did
this trade happen? At the moment it's just Google and Facebook
who were relocating their assets but soon as the workforce gets more freelance, more
globalized, digital nomads and so on, workers are going to do the same thing.
And it just means the physical economy gets penalized more and the intangible economy
isn't taxed at all and it's like- - again it's more inequality. There is this two things
but if you tax land, if you're taxed on the basis of the land you use and the- - not so
much the amount of land but the location of the land prime city center real estate.
So for example Google owns all this prime City's real estate around Kings Cross, you
are using this prime city center land, you've built these wonderful buildings on it, that's
yours, the profit as a result of the buildings you've built are yours to keep but the land
itself belongs to everyone and it was always there and if you want exclusive rights to
that plot of land then you pay a fee to the community for it.
And land value tuck solves this huge problem that governments are going to face on taxation.
Would the yield from- -I mean I actually agree with much of what you said we ought to tax
wealth rather than income, taxing income is a disincentive to working people of whatever
kind but taxing the wealth that people have, the land that they have, the houses that they
have and so on is much more efficient but will the yield be sufficient to pay for our
hospitals, our police, our fire brigade and so on?
Yes these things all could be paid for but it would suddenly become clear how much they
really cost and then the taxpayer might think, “Okay, no I'm happy to pay for that” or
he might go,” Do you know what? I'm not happy to pay for that”
And I think the private economy- -the free market can provide these things to a higher
standard for a lower price but that is an issue to be debated by the political parties
and the political party that wins the election because that again every political argument
is ultimately about taxation what are we paying for? Who pays and how?
Daylight Robbery, fantastic book, I urge everyone to get it. Dominic Frisby, thanks for joining
us on the Sputnik. Thank you very much.