How will Each Area Apply VAT

So if we can imagine that UK has been divided in to separate entities with only a backbone connecting them for national defence and other basic larger group interests. How does Vat taxation work in this particular situation.

Value added Tax as it presently stands is applied to all goods that we buy in the shops. With some notable exceptions such as baby goods and food. While for most products it is applied at the standard rate of 20 percent. Alcohol and cigarettes are taxed at higher rates and winter fuel is taxed at the lower rate of 5 percent.

In short there would be no change in SCD. Independent governments within the UK would be able to set their own rate of VAT keeping with the idea that small is manageable. Where it becomes interesting is if we have a separate area  like Cambridgeshire for example should choose to apply Vat at only 10 percent. How many people would find that attractive and what would be the result? Or alternatively if you live in area of outstanding naturally beauty for example like Devon or the Lake district. they may well choose to apply 22 percent tax and raise more revenue from tourists and such like.

While the above deals with VAT on  a personal level. Let us take a look at how that would work with Businesses.  Of course Businesses can claim Vat back from the taxman on purchases that they make. So for example a car company in the Wirral needs steel from Yorkshire to make its cars. As this deals with two entirely separate governments under the SCD idea this is a possibility of how it could work.  For example lets call one of them Merseyside and the other South Yorkshire. They charge different amounts of Vat. Merseyside charges 15% and Yorkshire charges 20%. In this case our car company would be due 15% back from Yorkshire.

While this would not be done on a personal level but the figures would be collected by the VAT department and then a final amount would be taken off the amount owed in reverse and what is left could be collected.  However of course some governments could choose not to be party to such an arrangement and this too would be acceptable. The fundamental guide in SCD is that it can if that is what each group of people want.

However there is a major problem with the above. When it comes to filling in a VAT form you could have 22 different areas to claim Vat against. Instead of as it is now having to specify against just the EU. This may not practical. So we could do away with Value added Tax altogether. However this is problematic as most governments can raise as much as 40 percent of their revenue this way.

If one wants to encourage communities and accountability by just having reclaimable VAT in their local sovereign state. Businesses would at first need to look at their own state to make this purchase as there would be a tax benefit for to them to do so. This in itself would create a more diverse business economy. Instead where we at presently import from larger manufactures there may well be a tax cost savings at source. However companies will always choose the cheaper source using tax in this way would allow people control and less dependence over their economic future. The alternative we have seen the results in the last 20 years where there are less and less smaller manufacturing supplies left and ultimately this means less choice.

SDC Political Theory – Larger Democracies

What is it?

Best way I can describe Social Contract Democracy, is to compare it to ordering coffee in Cuba. In Cuba due to the different culture and language if one asks for cup of coffee either they get one with a lot of milk or they get black coffee. It is very hard to order a coffee with just a little bit of milk. Often in the world, we have political systems that are either capitalist (right wing) or Left wing (communist, socialist etc.) to big or too small. Of course there is third way, however most of the results seem to be either one or other instead of having a system that encourage politics for the benefits of smaller communities, but still encourages capitalism.

In a couple of sentences, I would like to introduce Social Contract Democracy (SCD). Where we encourage smaller communities within countries, cities, to take responsibility for all their resources that they use, thus achieving the highest possible accountability and efficiency with in society.

Of course, one could argue that this is the breakup of modern society, as we know it. How are larger projects going to be done? For example, defence. Currently we spend about 35 billion pounds on defence every year in the UK. If we are to move to a more accountable system this is going to fundamental, affect how things work. In a social contract, society there needs to be a skeleton network that inter links different communicates, a bit like the internet. This can even form some kind of redundancy as backup for communities that may suffer from crises be this political or natural disaster. In a strictly accountable society, the individual communities would account for their available resource. However, they would be able to form alliances to help with support and back up of each other. In other words for instance if Lancashire suffered a crises, for example an earthquake and half of its infrastructure were destroyed. All the separate political communities as a whole would come to its assistance through an interconnected network alliance that protects shared interests. We cannot be so naive to think that there are not aggressors to independent free states.

The benefits of this sort of system is the high ratio of democracy. That a small number of people have much larger representation than with the current system where that on the whole it tends to disempower local people who feel that the political power within their system is based outside of their control or at some other geographic location.
While it can be argued that, there are substantial savings to be made by applying large-scale economics the loss of control/accountability created by such systems is also far larger however, the biggest benefit is that it is no longer possible to say it is out of my hands. The people within society will be empowered to keep some kind of control over the life that surrounds them and keep corruption to a minimum and in the case where corruption is discovered these are manageable systems that can be run to level of competency by each smaller society. They should not be more complicated than that lowest educated can understand.

As historical studies have shown, a society can only move as fast as the slowest in the group. If we wish to keep a fair society, where everyone can benefit and not just a minority then we than incorporation of these ideas is necessary. However this has nothing to do with social contract theory as it the people within a given district that decide these things, they can choose for higher taxes or lower taxes, they can choose to have bicycle lanes or not, it is entirely up to themselves. However, it is this authors hope that when people feel empowered and participate in local politics that the definition of fairer society will in itself begin to ask some simple and complicate questions. For example, does it benefit society to have such a large difference in pay levels? The idea that we must pay large bonuses to bankers would not be a problem in such a society where it would have to be self-sufficient, and it would have to provide all these services by itself. The focus may move away from such economic indicators as the creation of wealth to other indicators such as quality of life with in a community.

How does it work?

Social contract is about creating accountable systems that everyone can understand that in essence its working should be a thing of beauty. The optimum figure for accountability is yet to be calculated however it is reasonable to suggest that in the case of the UK that this may follow county boundaries or smaller. The Isle of Man operates on about 85,000 persons. It is possible that county boundaries could be too big however, any area would need to be larger enough that there is a reasonable amount of resources to deploy and that the division should be based upon resources and not on geographic landscape.

After we have devised a system for the splitting up regions that can control adequate resource for meaningful social Contract accountability. Each area could choose what ratio of representatives it has in relation to its population size. Essential key factors here is that the people come from the chosen area and have a connection with the people and it resources. While each area is independent and in total control of all its resources. It needs to be legislated that their constitution may well need to be predefined by the skeleton interlinked backbone. This is to stop any problems that could arise from a malfunctioning regional government. While smaller govern bodies are no less susceptible to greed or corruption the main difference in them is that the people are franchised and alerted to make sure that is it rooted out quickly and handled efficiently. It serves as reassurance to the surrounding counties that where there is less social upheaval or failure of society in the surrounding counties a necessary legal framework exists to resolve such disputes.

What is the cost?

There are two levels of cost, in the first instance, that we can look at. One is implementation cost and then there is running cost. In implementation cost we are examining the changing of institutions that already exist to manage slightly fuller workload. The increased responsibility, for instance, where councils are now responsible for raising rates and generating revenue for local services such as rubbish disposal, schools, etc. This will significantly increase a whole array of new responsibilities for these governments to manage. As it will have to budget for everything that falls within its geographic domain. It already has the means for raising income with council rates. It is possible that this could be combined to create one mechanism for raising spendable revenue as everything is within a small area and is essential spent on local resources. The requirement for two taxes is unnecessary and provides an over burdensome cost. However, as stated previously, this would be at the discretion of each area. The whole point is to pass over autonomy so that each area will be empowered and responsible for it.

More critical views:

One of the strongest arguments levied against Social contract democracy, it that it will increase cost for the running of healthcare, defence research etc. Because one will have possible 56 areas, running these services separately. Just to process taxes differently could lead to increase in administration staff for example. However, it is not certain that this is the case. As there is already, budget control departments at local levels it would simple be a case of reporting to a new boss. While it is to be anticipated that there would a slight increase in the running cost, it also the idea that new and innovative approaches would be developed due to the fact that these services are empowered to provide the best services within their means and would be subject to a national code of practice as in the past. Where arguable the one size fits all approaches does not allow services to be personal enough for its local end users.

How can it be implemented?

Splitting up countries into smaller communities and give them autonomy over themselves begs questions like: what happens to national commitments such as debts, nuclear weapons, and defence? While it is easy to answer questions on defence in so far that each area can choose whether to opt in or out, it is much harder to answer questions regarding liability in the form of debt. This is because the choice one makes will have a severe effect on the others and the possibility to obtain funding for large projects. In principle, we have two scenarios. One if local communities choose to honour their portion of these debts. It would be reasonable to assume that they can then have access to credit. However, this topic is unclear as this is the nature of loaning money what any set of circumstances will be in the future.

The second option is that the individual communities choose not to pay back this loan. This effectively places them in a no credit situation. There are many countries and areas in the world that operate from a position of no debt and this is either written in their constitution or a result of the simple fact that they cannot get any credit creates this situation. Some of the economies are very wealthy and successful albeit this is because they operate lower tax and are able to attract wealthy individuals. However, it does make case that small is beautiful can also be successful.

Problems with Modernity:

With big societies and democracies carried out on a large scale, as great as it successes, so will be its failures. Do we have a fair society? Is the country’s resources being used in a way that benefits the majority? If the main purpose of society is to provide protection to all those that participate in it. Do we think that we successful do that? In the past, we may have been able to answer yes to different parts of these questions. However, the changing world would indicate according to the media that we are surrounded by stories of mismanagement or corruption on a large scale. The worst part about this is the apathy that people feel that they can do nothing about it. Even elections attract a low turnout with over 35 percent of population not even bothering to vote, do we want our politicians to root out corruption so that we do not have to be engaged and spend our time on this? However power breeds corruption so it is important in such a society that we limit the amount of power.

Empowering local folk:

The main resource any society is its people. Societies that function well operate themselves in the fairest way for its entire people. If we are going to educate people than we should make full use of this resource. Either we want them to think or we do not want them to think. The middle ground is too unclear. Where people have a vague idea or concept something but do not truly understand the implications of any one or group of decisions.

Defence:

One of the most tricky ideas of social contract democracy is how smaller democracies defend themselves in a world were conflict seems as much a part of the human condition as our ability to love one another. Smaller democracies do leave themselves exposed not only to the physical might of surrounding countries but also to their economic power. However, there are very reasonable solutions to this sort of problem that exist within the world presently. Taking structures that exist and applying them to different situations can provide creative solutions. For example, in this situation we currently have NATO whose essential purpose is to safeguard the freedom and security of its members through political and military means. It is within our grasp that we could provide a similar sort of system in SCD. The much smaller autonomy of its member groups forming a larger group to protect the ideology and economic life of its citizens.

How does Social Contract Democracy differ from a Local Council

One of the question I am often asked in my study of a better Social contract is how does SCD differ from a local council.

Well in simple terms it is about giving people the option to choose about things that go on around them and that they are directly affected by.  It is doing away with the argument that I  am not responsible and it is about empowering people directly. So that they can make their own decisions about the things that affect them. In short small-scale democracy may work a lot better than large-scale democracy.  Of course this is what local councils do. They arrange parks, amenities, traffic bye laws etc. However there is a statutory limit to how far local councils can go. They are restrained by local government and by parliament. In SCD they would have all the power to decide everything that goes on in there defined geographic area. So for example if they thought that spending more of their budget on health resources they could do so. If alternatively they would rather have a lower tax they could do likewise.

Now I can imagine that there my be a lot people who are quite happy that somebody handles all these things for them. They may even feel more trust for some one further away than closer to them. However if one is happy with that status quo then they can not complain when things go wrong as they will. Or could they?  a large part of the problem is how much control do we want to give away in return for a managed life style.

If the social contract of our society is to take responsibility for all our citizens what do we do when we have large parts of population not taking part in that agreement. For reasons such as poverty, education or abuse. I would go so far as to put forward that most these people probably do not even understand the term social contract. Are we too assume that because some one is better educated that they should make the decisions for those that are not. By ignoring the problem we are oppressing ones that do not understand. Of large-scale governments I can not see how they can rational solve such a problem. Of course local government can insure that with housing and planning that such pockets of areas do not come to exist. However this has to be a concept that recognizes that society is diverse and that no particular group of people, be they well-educated control the resources that are available to us all.

So it is challenging that we say to some the poorest parts of Britain take a full control of the services that surround them to build independent communities that are self-reliant. It may mean that we have to engage a different indicator as to how successful we are as a society. Possibly one that does not involve money as the indicator but one that counts how well it engages all its people of who it governs.