Model House of Commons Economic Record
An article for recording economic policies in Model House of Commons Law so as to give an impression of what the aggregate effect of these policies would be.
This article is maintained and updated by the Speaker of the House of Commons, Birchington.
When a bill is voted on in the Model House of Commons it can either fail or win a majority of the current MPs' support, in which case it becomes an act of Parliament and is recorded in the MHoC Law document. Numerous bills have been passed that would alter the economy in lots of ways, predominantly through reforms of taxation and the setting of additional spending for the state. Cumulatively these changes have meant that the Model House of Commons operates on the basis of an economy that would look radically different from the one actually existing in the UK. This article is a record of the main legal differences and their primary consequences.
Disclaimer: it's not possible to fully quantify the changes that an entirely different tax code would make to the tax base and so estimations of the effect from fictional taxes will always be informed by different theories and approaches within economics.
Some existing systems of tax, like income, have been reformed massively in the MHoC, while others (like VAT) have been done away with entirely. Other taxes are new creations with no counterpart in the real Exchequer.
Less revenue would come from the taxing of income due to the MHoC rates differing greatly from those of real-life. While in the 2012-13 tax year income tax receipts were £149bn for the actual UK government, based on the 2011-12 tax year's statistics we can predict that the MHoC would've received an amount much closer to £123bn instead.
The current rates of income tax are: £0-20K: 0%, £20-30K: 15%, £30-50K: 30%, £50K+: 50% and the details on the reform that set those rates can be found in the Finance Act 2012. Previous changes to income tax were made in the Tax Act 2011, the Welfare and Tax Act 2012, and the Welfare and Tax (Amendment) Act 2012.
Ground Rent (Land Value) Tax
This is the tax that generates the most revenue. A ground rent tax is a tax on the economic value of a piece of land, in other words, it estimates the monetary value of a piece of land - how much it could be rented for were there no structures on it - and takes from the owner a percentage of this value. A conservative estimate of the total value of land in the UK gives the figure of £559bn. In TSR this is currently taxed at 65%, giving an estimated revenue of £363.3bn.
The Ground Rent Tax was first introduced by the TSR Libertarian Party and has received subsequent support from parties across the spectrum. It was first introduced in the Tax Act 2011, with a later amendment in the Welfare and Tax Act 2012.
GRT is considered to be an efficient form of taxation, since the rate is decided by the unimproved value of the land it does not distort economic decisions: the land can be optimised with no additional expense for the land owner (you could build a palace on your land and it wouldn't directly increase the tax you owe).
It is also claimed the tax would not be passed onto the tenants of the land. Since the supply of land is inelastic the rental value of the land is based on what tenants are willing to pay (demand), not on any expenses that need to be covered by landlords, the result is that the tax burden is not directly passed onto the tenant. Furthermore, it would also potentially prevent housing bubbles by making it far less attractive to speculatively invest in land.
Financial Transactions Tax
A tax that levies a 0.01% charge on every trade of stocks, bonds, commodities, unit trusts, mutual funds, derivatives, and currency that occurs in the UK. With a low impact on trading volume this tax would raise £50bn, with a high impact this figure would reduce to £32bn. The FTT was introduced in the Finance Act 2012.