Health facilities must be free. The employee and employer contributions have already been included in the rate of VAT and the cost then shared between imported and local products. It is vital to have a healthy community and the cost of the health service will have been considerably reduced by the reduction in employment costs and other inputs. Encouragement should be given to maintaining healthy lifestyles. There can be a mixture of private and government facilities with the government acting as a medical aid facility when other private facilities are used.
Education should be free. Again the taxes required for the cost of education have been collected in the revised VAT taxes and again shared between imported and local products and services. In addition the cost of education has been reduced with the reduction in overall employment costs and input expenses. It is vital that the community has a good standard of education and the education of children must be compulsory. A rate per child can be used so that private and government schools can exist.
Basic liveable pensions should be available free. It is a hopeless task to expect people to fund their own pensions during their lifetime or to save sufficient capital particularly when there is nothing that can protect the community against ill managed pension funds whether insured or company funded or the loss of capital investments. The community will have paid for their pensions through the tax system. The social service payments have been included in the rate of VAT taxation and the expense is shared between imported and locally produced goods and services. As the health services improve and the average life expectancy improves so it becomes more acceptable not to have a fixed retirement age. Many people would be quite happy to work after 60 or 65 years of age if jobs are available, it would help them to continue to live better and healthier lives. (The writer is still working at age 80) They need to be assured that when they do retire they will be able to live comfortably. No responsible government can stand by and allow old people to die because they are unable to keep themselves.
The rate of VAT will have taken care of the cost of these facilities and in most developed countries the facilities are in place but the governments find themselves running out of funds to adequately maintain them at satisfactory levels. This should not happen and the proposed changes should produce sufficient funds to maintain the pensions. The rate of inflation will be minimal and the cost of unemployment will be considerably less. The growing numbers of unemployed and growing cost of unemployment should be of major concern in the present environment.
The change in the tax system is designed to create employment by reducing the cost of employment substantially and make business enterprise an attractive proposition with adequate capital available. The best economic position is when the cost of employment is at its lowest and the spending power is at its highest and this becomes the main aim of government. Government income is tied to the performance of the economy. It becomes vital for the government to create the right conditions for the community and for the government administration to be efficient and effective.
The level of taxation should in these circumstances always produce a budget surplus to fund the pensions and which can be used to fund Capital Projects.
There are other factors involved in the strive to maintain low employment costs.
Housing and accommodation
Accommodation has to be available at a reasonable steady cost. This may entail maintaining interest at low levels. If houses are purchased then a low interest rate is needed for mortgages and if rented a low interest rate is required by the investor to maintain low rental income. Property speculation becomes a problem that has to be addressed. Accommodation is one of the major items of expense of the workers and governments would need to make an effort to keep costs at affordable levels to maintain competitiveness in employment costs and spending power in the economy. Some investors will buy up properties with the intention of driving up prices to make profits. It is empty houses that may yet need to be taxed to encourage sales and utilisation.
Local rates and taxes
The company rates and taxes will be covered in the new level of VAT. The individual payments of these taxes increase the amount that has to be paid by the business and government sectors to the individual. It is a tax that forms part of the income and passed on in the price to consumers. In consequence the taxes could form part of the total VAT collected and passed onto Local Authorities. This would help to keep the cost of employment down. T.V. and radio licenses are equally just a means of taxation and supporting government with additional collection expenses which seem to be unnecessary. Again it adds to the cost of employment and is already included in the prices.
The Standard of Living
While I have considered the reduction in individual expenses in regard to taxes and the like the object is to improve spending power in other areas. In addition to spending on living costs such as groceries and consumer goods other areas of spending open up such as entertainment, health care in the form of sports and recreation which in turn will provide employment for other people. This would include holidays and travel. Consumer goods and the demand for them are constantly changing with fashion and technology, a few years ago the cell phone was not on the market and today everyone seems to have one. The gramophone record has been replaced with tapes and compact discs and memory sticks. In the developed countries these things happen but there are poor countries which have not developed their economies for various reasons where the standard of living is still very basic and unaffected by modern day changes. It is these countries which do not provide a market place for business and struggle to develop or compete. The reason is very often political. Even the Arab states that have become extremely rich internationally through oil have not always developed their internal markets. Development comes with the employment of the community and the spending power generated by that employment.
From the businessmen’s point of view the spending power is improved for the least cost by increasing the minimum wages at the bottom of the scale and not necessarily the top salaries which will often not be spent on local products.