Why Greens believe in the ‘Joy of Tax’

Molly Scott Cato describes the Party’s tax policy, advocating for wealth tax, carbon tax, and land value tax to reduce inequality, support the green transition, and invest in public services.

Coins with plant
Coins with plant
Molly Scott Cato

Why are there haves and have-nots? This is question that has taxed the minds of radicals for millennia. Must the poor always be with us? Is inequality the spur that drives ambition and innovation?

Greens have a very clear position on these deep philosophical questions based in communitarian values. To steal another phrase, perhaps we can best sum up our approach to distribution by using the phrase ‘there but for the grace of God go I’. People are not responsible for the misfortunes that befall them. As a society we are only as strong as our weakest member; redistribution does not arise from the callings of charity but from the demands of justice.

So much for the philosophy; what does this mean in terms of our policy?

We are not just open about our desire to raise taxes but proud of our policy of using tax to reduce inequality, support those on lower incomes, and invest in the green transition. We see tax as the payment you make to ensure that we can all live in a civilised society but we also believe that taxation should be strategic, using taxes to move towards the sustainable and just society we wish to see.

At present we are the only political party in the UK arguing strongly for a tax on wealth. This is an urgent necessity after decades of growing inequality. We have not pinned down the exact form of the tax that will be in our general election manifesto, but we have made a clear commitment to the principle and are certain that a tax on the assets of the super-rich could bring in tens of billions every year.

Other Green tax changes would see the income the wealthy earned from investments taxed at the same rate as the incomes of those who work and closing the loophole that means that as you earn more you pay a lower rate of National Insurance. These policies that enable the wealthy to accrue even more wealth while those on lower incomes contribute more are an unjust legacy of Tory government that must be urgently abolished.

Using taxation strategically rather than simply to generate money for spending, we would expand the range of eco-taxes to reduce the use of materials, encourage recycling and reuse, and to deter pollution. When it comes to the climate crisis we know that it is fossil fuels that are the cause of the problem. So those who produce them should pay for the cost of their activity in the form of a carbon tax. Of course, imposing a carbon tax on fossil fuels would also mean that they become more expensive, making them less attractive compared to other less damaging forms of energy.

The benefit of a carbon tax is clear: businesses would receive a clear signal about the cost of using fossil fuels and would face a strong incentive to find other energy sources. A carbon tax could also be fixed on a clear and rising trend so that businesses could plan for the cost of fossil fuels to rise gradually over time, and they could factor this into their planning. Because it would feed into higher prices, the tax yield would be spent on green investments, for example home insulation.

Another strategic objective of a Green tax policy would be to encourage equitable and sustainable use of our major national resource - land - via the introduction of a Land Value Tax. Land Value Tax would be levied on the annual value of land itself, excluding any structures or improvements.

Land Value Tax follows good taxation practice: it would be cheap to collect and difficult to evade, and it would discourage the use of land for speculation. So long as there is no tax burden on the holding of land it is an ideal speculative investment, and landlords enjoy considerable power to determine its use according to their own self-interest. Crucially, this includes the power to keep land idle or under-used. A tax on land values is levied whether the land is being used for its democratically determined purpose or is just left idle or in some lower-grade use (city-centre car parks are a prime example), encouraging landowners to make the most constructive use of their sites.

Greens have an ambitious programme of investment in the transition to a green society, the Green New Deal. We are fully committed to the rapid transformation of our society including electrification of heating and public transport, a massive home insulation programme, as well as the restoration of the natural world, rewilding and protecting and creating habitats for the other species we share this planet with.

We would also use tax yields for direct redistribution. We currently have the most generous offer to those on benefits – increasing Universal Credit by £40 or about 50 per cent – and introducing a Universal Basic Income, a payment made to every citizen without conditions as their share in the national commonwealth. This proposal would give everybody a sense of fundamental security and end the humiliation of proving yourself willing to work and the sense of being a ‘wage slave’.

We are also clear about the need for urgent investment right across our public services, from transport and green spaces, to the health service and our schools and universities. More than a decade of underfunding has laid waste the public sector of which we were once so proud. We have already pledged to keep public sector pay in line with inflation but would also invest in our public infrastructure.

The other parties feel the need to prove that they are tough on tax-and-spend, inventing ‘fiscal rules’ that prove to the markets how macho they are. Our empowered view of monetary policy means that we have a quite different approach here. While conventional economics tells us that we must tax first and spend later, our monetary policy is based on the understanding that money is spent into circulation and taxed back later to prevent economic overheating and inflation.

 So for Greens, both taxation and monetary policy can be used for investment for the public good, to help us build a fairer, greener economy.