Taxes and poverty

Once again we face an austerity-type budget imposed by the finance minister. It appears our government (and many others) has not learnt that taxes are the root cause of poverty.

Imposing the small increase in VAT in the misguided belief that this would help our economic situation was proven wrong.

VAT is a type of tax on turnover of sales and services, which have been vigorously opposed throughout history. For example, Americans resented the imposition of sales taxes on salt and tea, held the “Boston tea party” and then fought the war of independence to free them from Britain’s “taxation without representation”.

India resisted the tax on salt and eventually defeated its British rulers, who had colonised half of the free world. In 1993 the governing party in Canada imposed a national sales tax. Within a year the party lost power and was reduced to “a minority too small to be official any more”.

The US is one of only a few countries to have rejected sales taxes many times, which may explain its economic resilience. History is littered with the remnants of failed sales taxers, from kings to tsars to emperors, ordinary presidents and politicians.

Henry George, the great American economist, identified the cause of poverty as the unwillingness of the rich landowners to share their unearned wealth with the rest of society. He proposed that the landowners meet the cost of government from their rental income and the state eliminate all taxes on work (income) and thrift/initiative (companies) and turnover (VAT).

Andre Quinlan Via e-mail