TEAL
Total Economic Activity Levy
TEAL is a
simple form of taxation intended to replace all other UK State Taxes.
THERE
CAN BE ONLY ONE TAX !
By broadening
the tax base to be all-inclusive, the actual level of the tax (the percentage
levied) can possibly be kept to as little as 2% of UK’s economic activity or
the deposits and payments reflected in the country’s bank accounts. TEAL is
levied within the banking system, by the banks, who will be the instruments for
collecting TEAL.
We all pay tax
and UK is one of the most highly taxed societies in the world. Some of the
obvious taxes can amount to 60% of your income: 35% on your salary, 20% vat,
Fuel Tax, Council Tax (perhaps 10% of the average salary?)
IMAGINE IF ALL
TAXES COULD BE REPLACED BY A SINGLE LEVY.
TEAL DOES THAT
!
THERE
CAN BE ONLY ONE PEOPLES TAX !
TEAL is a levy,
hoped to be less than 2%, on all economic activity as reflected by the flow of
money through the banking system. It is all inclusive, no exceptions, no
variations. Whether you are a street vendor, a business executive, a priest,
the Chief Constable or even the PM himself, every payment and receipt in all
bank accounts will be levied by the banks on behalf of the state, perhaps at a
rate of just one percent (1%), just as the banks now collect and pay VAT.
TEAL is
expected to replace (almost) every other source of state revenue from the
People.
THERE
CAN BE ONLY ONE PEOPLES TAX !
Total Economic Activity Levy
A New Concept in Taxation
A New Concept in Taxation
A system that would be equitable across all economic groups,
allowing the poor to develop capacity, whilst facilitating entrepreneurial
activity, economic leadership, and domestic and foreign Investment.
So then what is TEAL?
So then what is TEAL?
TEAL is a transaction tax that will be applied to both sides of
every transaction that is routed through all the financial institutions in
the UK – including banks, building societies etc. Transactions involving
cheques, cash, drafts, ATM’s, credit cards and electronic transfers will all be
subject to the levy, thereby creating a tax “net” but on which is less than VAT
How will TEAL work?
It is anticipated that TEAL will be levied in the range 1.0%% to
4.0% - the actual rate will be determined BY THE NEEDS OF THE COUNTRY AND ITS
PEOPLE. It will be seen that minuscule changes in the rate will involve huge
sums of money.
It has been confirmed that the total effective value of all
transactions carried out annually – our TOTAL ECONOMIC ACTIVITY - is currently
in the order of X trillion. This figure includes Bond Market transactions of Y
trillion that - for the time being - are ignored. Therefore TEAL levied at
1.0%-4.0%% on Z trillion (remember that TEAL applies to both buyers and
sellers) would raise XYZ billion in revenue. We would have an excess of revenue
over expenditure, which would allow all other taxes to be done away with.
AND FOR THE NATIONAL DEBT TO BE PAID OFF AND THEREBY ENABLING THE TEAL RATE TO ACTUALLY BE REDUCED OR FOR THE CREATION OF A NATIONAL WEALTH FUND THAT CAN BE SHARED BY ALL.
AND FOR THE NATIONAL DEBT TO BE PAID OFF AND THEREBY ENABLING THE TEAL RATE TO ACTUALLY BE REDUCED OR FOR THE CREATION OF A NATIONAL WEALTH FUND THAT CAN BE SHARED BY ALL.
How will government collect it?
A “transaction” will be carefully and legally defined, but at this
stage is taken to mean the monetary value attached to all goods and services
transacted between two (or more) contracting parties. Each party will be levied
as follows.
The seller receives 100 from the buyer,
and when the money is deposited, the seller will be credited with 96-99-
assuming a TEAL rate of 1-4%.
The buyer, paying by cheque will be
debited with 101-104 which in effect means that the state has collected a total
of 2-8, or 2-8%
Banks will remit the proceeds of TEAL directly to the ….., and will be
recompensed by their either retaining the proceeds for a specified period, or
by receiving a commission. The actual programming and implementation of TEAL
will be the simplest aspect of its entire concept.
We
are proposing that large companies still pay tax though, 25% in the City of
London and 10% in the rest of the UK and for these taxes not to go to the Government
but to a Peoples National Wealth Trust Fund that we are beneficiaries of
Shareholders of 1st Call if you like in GB PLC and this can provide
for pensions and other things. This money would be ours tax free less of course
the TEAL.
Peoples
National Wealth Trust Fund would set up Regional Peoples Owned Banks and lend
the money interest free for housing & Community development to local
community co-op development banks which would add value by investment into
communities using LETS and other local currencies for community business and
housing which could then be bought interest free or rented out through new
peoples housing co-ops.
The
above large companies tax would not
only benefit the people directly but make us an attractive country for investment.
In 2010, in
South Africa http://www.tealtax.co.za did an exercise replacing conventional tax with TEAL for the
period from 2006 to 2013, They estimated the flow of money through the banking
system, the TEA or Total Economic Activity, as 30 Times the GDP or Gross
Domestic Product. We then plugged that factor into their model and compared the
actual and projected income and expenditure for the Republic of SA (extracted
from Minister of Finance’s budget presentations) for the periods 2006 to 2013.
The chart below
shows for each year, the NATIONAL DEBT from application of conventional tax
systems in South Africa, the TEAL, the TEA and the National Debt arising from
application of TEAL** .
Teal & the National Debt
Notice how the
national debt is reduced to Zero after application of TEAL.
Recent figures indicate the TEA and TEAL values (but not the rate)
should have been increased by up to 68%, further shortening the time taken to
reduce the national debt to zero. Imagine this; by 2011/2012 they could have
been living with a zero national debt for three or more years.
The National
Debt is the NATION’S OVERDRAFT and is the extent to which expenditure exceeds
income.
GO
INTO OVERDRAFT! PAY INTEREST! CEDE YOUR ASSETS AS COLLATERAL!
Our largest
asset is our population and their earnings. This is ceded as collateral for
government’s overdraft. Government says we and our children and their children
ad nauseam will pay this debt. But the debt is ever increasing, so how and when
is this going to be paid? Never? And who is ever getting richer on that
arrangement?
Not only would
the country be able to reduce the National Debt, it would have all the funds
necessary to address country’s needs. Furthermore, after the introduction of
TEAL and the phasing out of all other State revenue, Jo Citizen, for the first
time in his or her life, will know exactly how much tax they are paying.
How will TEAL benefit us?
Compared with the present system of payment through Revenue
offices, TEAL offers many benefits, the following being but a few.
The flow of revenue will
be immediate, continuous and predictable. There will be no long drawn-out
delays due to objections or any other reasons. There will be no such thing as
non-payment of taxes, except for deliberate evasion that will be traceable and
carry very heavy penalties.
The State will be able to
budget far more accurately than at present, and provision will be made to allow
small adjustments in the TEAL rate to allow for under, or over-collection.
There will be radical
changes in the composition of Revenue offices, as their present functions fall
away. It will be possible to re-deploy experienced staff to other government
and provincial departments in order to monitor and audit income and
expenditure. This will provide an effective means of eradicating theft and
corruption – presently rife throughout the country.
The fact that we will have
an excess of income over expenditure holds very significant implications for us
all. The impact on foreign investments will be considerable, and we might even
get a pat on the back! Our present budgeted expenditure already contains a
provision for a deficit of xxx billion – which of course will fall away. This
will mean that this huge amount of money will be available for far more
beneficial purposes. It can be used for fixing our hospitals; boosting our
police services; building more schools, employing more teachers; reducing our
accumulated deficit, and - as important as any of these - GETTING THOSE HOUSES
BUILT.
The removal of VAT and
taxes on petroleum products will benefit the very poor IMMEDIATELY - NOT in six
months or six years. The cost of most goods and services will fall by more
than12% - but petroleum products can come down by 40% - or more.
The agricultural industry
will obtain important benefits from the implementation of TEAL. It will be
possible to set aside a very small percentage of the levy to provide funds many
things
The major immediate
benefit will obviously be a large reduction in the price of fuel.
What about VAT PAYE and council tax
No More VAT, PAYE!
These removals of VAT, PAYE,
and personal and company taxes will also provide unique opportunities to
significantly reduce the cost of goods and services. This will lead to both the
narrowing of salary and wage gaps, and greatly reduced inflation. These points
are clearly illustrated in the following examples.
PAYE and deductions – now
going to the inland Revenue – will be retained within companies and may be
redistributed on a pre-determined scale. The main TEAL document shows that
(through computer models based on actual organisations) present wage gaps can
be reduced by as much as 40 – 50% - without any cost increases to the
organisation. Depending on the size and composition of the company, alternative
uses for this money would be to reduce selling prices, OR EMPLOY MORE PEOPLE..q
The cost of government –
both central and provincial – has the potential to drop considerably as a
result of the removal of PAYE and personal income taxes. The salaries of
officials and others can be adjusted to the levels of their present “take-home”
pay – i.e. after deduction of taxes. These people will of course be far better
off as a result of lower commodity and fuel prices.
Does this mean No more TAX returns?
There will be no need for complicated tax returns, because the State will have no (tax) interest in either profits or sources of income. The end of each tax year will be a total non-event because all taxes will have been paid in full and therefore there will be no need for tax consultants or lawyers.
Has anybody objected?
Objections made thus far to the TEAL concept stem largely from tax lawyers and consultants who will become redundant the day it is implemented. The most commonly voiced of these are: -
There will be no need for complicated tax returns, because the State will have no (tax) interest in either profits or sources of income. The end of each tax year will be a total non-event because all taxes will have been paid in full and therefore there will be no need for tax consultants or lawyers.
Has anybody objected?
Objections made thus far to the TEAL concept stem largely from tax lawyers and consultants who will become redundant the day it is implemented. The most commonly voiced of these are: -
“Within a short time
nobody will be doing their business through the banks”.
This came from a senior tax consultant who ignores the simple fact that there simply will not be enough cash to allow this to happen – present levels of bank notes in daily circulation are about xxx billion. The estimated average daily value of transactions is over xxx billion, so cash won’t last very long! He also ignores the security risk of vast sums of bank notes being continually moved around.
This came from a senior tax consultant who ignores the simple fact that there simply will not be enough cash to allow this to happen – present levels of bank notes in daily circulation are about xxx billion. The estimated average daily value of transactions is over xxx billion, so cash won’t last very long! He also ignores the security risk of vast sums of bank notes being continually moved around.
“Why has no other country
adopted a transaction tax?”
This objection is frequently raised. For any transaction tax to succeed, a highly sophisticated, nation-wide, computerised banking system is absolutely mandatory. It is only because of the phenomenal developments that have taken place in computer technology over the past decade or so, that South Africa – with such a banking system in place - will be able to successfully implement a transaction tax.
An extensive list of objections and our responses thereto are contained in the complete TEAL document. Although the case for TEAL is now overwhelming, we nevertheless advocate progressive implementation in order to both reassure the electorate, and ensure that revenues from the levy are meeting forecasts. Because the revenue flow will be immediate, it will be possible to evaluate results within a week following either initial implementation, or any subsequent changes in the TEAL rate.
This objection is frequently raised. For any transaction tax to succeed, a highly sophisticated, nation-wide, computerised banking system is absolutely mandatory. It is only because of the phenomenal developments that have taken place in computer technology over the past decade or so, that South Africa – with such a banking system in place - will be able to successfully implement a transaction tax.
An extensive list of objections and our responses thereto are contained in the complete TEAL document. Although the case for TEAL is now overwhelming, we nevertheless advocate progressive implementation in order to both reassure the electorate, and ensure that revenues from the levy are meeting forecasts. Because the revenue flow will be immediate, it will be possible to evaluate results within a week following either initial implementation, or any subsequent changes in the TEAL rate.
STOP PRESS
The Government of Brazil is urgently investigating the TEAL concept with a view towards implementing it to assist in their economic recovery.
The Government of Brazil is urgently investigating the TEAL concept with a view towards implementing it to assist in their economic recovery.
A negative
reaction can be expected from large business organizations who will assuredly
pay a great deal more tax than they are now paying.
Nov. 10, 2011
Consultations with
a large building company evoked the following response:
While Teal would be greater than corporate tax, their clients and their own internal structures and products would benefit from the removal of vat. TEAL, at whatever rate, would simply be factored into all their costs of operation. There would be a huge reduction in all forms of tax administration, particularly at year-end involving maximizing of tax benefits. All these factors were rated highly as benefits of TEAL. That a small percentage increase in their selling prices would cover all their tax liabilities and hardly be noticed after the elimination of vat, was deemed to be a strong positive for TEAL.
In an even more positive response, when approached about TEAL, a very prominent South African retailer said he saw no downside to TEAL and to the contrary, if TEAL were ever implemented he would immediately open a further 10 stores.
While Teal would be greater than corporate tax, their clients and their own internal structures and products would benefit from the removal of vat. TEAL, at whatever rate, would simply be factored into all their costs of operation. There would be a huge reduction in all forms of tax administration, particularly at year-end involving maximizing of tax benefits. All these factors were rated highly as benefits of TEAL. That a small percentage increase in their selling prices would cover all their tax liabilities and hardly be noticed after the elimination of vat, was deemed to be a strong positive for TEAL.
In an even more positive response, when approached about TEAL, a very prominent South African retailer said he saw no downside to TEAL and to the contrary, if TEAL were ever implemented he would immediately open a further 10 stores.
A tax system must
accommodate the ability of the poor to pay.
Nov. 10, 2011
The present system
imposes 20% vat plus sundry other hidden taxes on even the poorest. TEAL will
impose perhaps as little as a 1-8% levy in place of all those taxes, even on
the poorest. It is supremely equitable that someone who earns 100 times more
than another should pay 100 times more tax than that other, and that a project
that makes many demands on the economy should pay more than one that makes
fewer demands on the economy.
In this way TEAL taxes the poor at a level that they can afford and the rich at the level that they can afford.
In this way TEAL taxes the poor at a level that they can afford and the rich at the level that they can afford.
A tax system
should address social justice
Nov. 10, 2011
Social justice
means different things to different people. Deficit budgets penalize our
children for our benefit. There is no social justice in that. Teal will permit
adequate funding of all social needs and at the same time eliminate deficit
funding.
That is social justice.
That is social justice.
Banks are not
going to act as tax collectors without charging for the service.
Nov. 22, 2011
Like they charge
for collecting VAT and PAYE and Stamp Duties and other taxes and levies related
to their doing business? The thing is that no business or employee charges the
state for collecting taxes on behalf of the state. It is the law which imposes
the duty on them to make those collections and pay them over. In that respect
TEAL will be no different from any other tax.
Benefits - what
are the principle benefits of TEAL?
Nov. 19, 2011
Simplicity of
application and cost effectiveness of the collection process.
For individual taxpayers - a reduction IN TAX from something like 60% of income to perhaps only 1-8% of income and the meeting of all tax obligations in a single simple process that does not involve them administratively - i.e. no more tax returns.
For corporate taxpayers - the ability to simply meet all tax obligations with a single simple process that also does not effect them administratively, i.e. no more tax returns, also no more involvement in the tax affairs of their employees and other trading partners.
For individual taxpayers - a reduction IN TAX from something like 60% of income to perhaps only 1-8% of income and the meeting of all tax obligations in a single simple process that does not involve them administratively - i.e. no more tax returns.
For corporate taxpayers - the ability to simply meet all tax obligations with a single simple process that also does not effect them administratively, i.e. no more tax returns, also no more involvement in the tax affairs of their employees and other trading partners.
Can you expect a
negative response from tax professionals?
Nov. 19, 2011
Tax specialists are
likely to be negatively effected and be unhappy about that. Particularly
accountants and lawyers who specialize in tax matters will in time have to
re-deploy their skills in other specialties of their professions as new tax
business runs down. Greater emphasis will probably be given to matters such as
effective corporate and business accounting and legal management. This should
result in better run businesses arising from their focusing on their core
business needs rather than being distracted by having to focus on meeting their
tax obligations.
Chaos will result
from changing the tax system, particularly if you've got it wrong.
Nov. 11, 2011
TEAL will be
implemented in a phased process. Each tax in turn will be targeted. When TEAL
is generating the equivalent of the targeted tax, the tax will be phased out
and TEAL will be retained in its place.
Could employees
arrange for employers to pay major expenses directly for them in lieu of salary
payments?
Nov. 10, 2011
Part of the
regulatory framework would be the requirement that all formal wages and
salaries be paid directly into the employees' formal bank accounts.
Expect government
to apply TEAL as an additional tax rather than a replacement tax.
Nov. 10, 2011
That unfortunately
is what would happen under many governments and particularly can be expected of
the current government. Approaches to the tax man and treasury evoked exactly
that response, viz. that TEAL would be used as an additional tax. The trick
would be to vote for this through a PEOPLES REFORM BILL in Parliament which is
what is planned and to have local referendums to support that across the UK
which pledges to use TEAL as a replacement tax and not as an additional tax.
How are informal
traders effected by TEAL? eg Do street vendors transactions attract TEAL?
Nov. 11, 2011 by
Admin
The short answer is
that all transactions attract TEAL. But importantly, is it even desirable that
the poorest of the poor should be contributing to TEAL and what happens if they
are simply ignored?
The solution to this will probably be contained in the regulatory framework for TEAL which could define what a formal and informal trader is, perhaps in terms of his/her turnover and gross profit compared to the poverty datum line.
So, a turnover of say £200 or more a day (say £6 000 or more per month turnover) might be deemed that of a formal trader who is required to bank his proceeds intact. As to the rest, we already know that the monetary throughput of the National Payment System is more than enough for the purposes of TEAL, so the absence of the rest of the informal / vendor sector would not be particularly missed. Their rendering an important service to their customers is probably more important to the economy than any TEAL missed from their exclusion. But in any event, their suppliers will undoubtedly fall within the formal sector and the economic activity generated by the vendors will be captured one level above.
We see their exclusion more as a positive feature of TEAL. It is important that TEAL should not hinder the poorest of the poor from engaging in honest trade to earn a living.
The solution to this will probably be contained in the regulatory framework for TEAL which could define what a formal and informal trader is, perhaps in terms of his/her turnover and gross profit compared to the poverty datum line.
So, a turnover of say £200 or more a day (say £6 000 or more per month turnover) might be deemed that of a formal trader who is required to bank his proceeds intact. As to the rest, we already know that the monetary throughput of the National Payment System is more than enough for the purposes of TEAL, so the absence of the rest of the informal / vendor sector would not be particularly missed. Their rendering an important service to their customers is probably more important to the economy than any TEAL missed from their exclusion. But in any event, their suppliers will undoubtedly fall within the formal sector and the economic activity generated by the vendors will be captured one level above.
We see their exclusion more as a positive feature of TEAL. It is important that TEAL should not hinder the poorest of the poor from engaging in honest trade to earn a living.
How will the rates
for TEAL be controlled?
Nov. 19, 2011
Teal is initially
envisaged to be 2% in total, 1% on deposits and 1% on payments. The Foundation
understand that the application of TEAL will likely change the levels of
economic activity from the present levels. Some factors will increase the
levels of economic activity and others will decrease the levels. Each event
will result in a need for a higher or lower levy. We cannot predict that. Other
circumstantial changes over time may demand changes in the level of the levy.
The expectation is that TEAL may be reduced by Government but can only be increased by a special act of Parliament and referenda, perhaps requiring a two thirds majority.
The expectation is that TEAL may be reduced by Government but can only be increased by a special act of Parliament and referenda, perhaps requiring a two thirds majority.
If everyone pays
less taxes because all other taxes are replaced by TEAL, where does all the
extra money for TEAL come from?
Nov. 10, 2011
The advantage of
TEAL is that it vastly broadens the tax base (estimated by 28 fold) and because
it does that, it can vastly reduce the rate of tax needed to fund the country's
needs. Put another way, it doesn't create money so much as taxes sources that
were otherwise outside of the tax net.
It also levies a different base from that of traditional taxes. It levies economic activity and all sectors of the economy are levied equally in proportion to their economic activity. Traditional taxes typically use trading profits or income or commodities (like fuel levies and vat) or access (like road tolls) and apply different rates to different taxes often intended to address specific needs.
It also levies a different base from that of traditional taxes. It levies economic activity and all sectors of the economy are levied equally in proportion to their economic activity. Traditional taxes typically use trading profits or income or commodities (like fuel levies and vat) or access (like road tolls) and apply different rates to different taxes often intended to address specific needs.
If TEAL has so
many potential benefits, why is it not operated anywhere else in the world?
Nov. 10, 2011
The short answer is
that the world is looking at financial transaction taxes and in due course will
be forced to adopt them in some or other form. It is being mooted in the USA as
a means of deficit reduction, and in the EU, also as a means of deficit
reduction, while the voice of reason, David Cameron, Britain's prime minister,
has already seen the light and opined that if a financial transaction tax were
to be applied in Britain it would be universally applied - which is pretty much
what TEAL does - except that TEAL is a flat rate transaction levy rather than a
tax. A Financial Services Tax can have all sorts of conditions, exceptions and
limits applied. Not so with TEAL. Tax is the past, TEAL is the future.
Projects will pay
TEAL during development periods before income and profits are generated.
Nov. 10, 2011
All projects absorb
taxes (eg vat & labour taxes) into development costs. Teal, at a significantly
lower rate than those taxes, will replace them, resulting in net cost savings
during development.
TEAL is good for a
low volume high profit business but not good for a high volume low profit
business.
Nov. 10, 2011
Whatever volume and
profit a business trades at, profit margins are based on the trading costs of
the business. A low profit business cannot just exclude say 50% of its fuel
costs (ie the probable levy on fuel) on the basis that it will impact
negatively on their profits. Instead levies and taxes are absorbed into their
costs of product and operation, which determine the cost to which they add
their profits. In any a low profit business, eliminating vat (say 20% of their
cost of purchases) and the fuel levy (say 5% of their operating costs) and
other hidden taxes, and then adding the 2% TEAL in their stead, should result
in a lowering of cost, to which they can then add their normal 2.5% (or
whatever) mark up. Their cost of sales and selling prices should both reduce
but their gross profits should remain firm. Their turnover should increase, a
function of lower selling prices and their net profits should increase as a
function of their increased turnover. Everyone is a winner.
Low volume high profit business and a high volume low profit business should both derive equal benefit from TEAL.
Low volume high profit business and a high volume low profit business should both derive equal benefit from TEAL.
Won't everyone
flee the banks and deal in cash and barter?
Nov. 10, 2011
The regulatory
framework will apply TEAL to all transactions, including cash and bartering,
and any significant transactions outside of the banking system will attract
TEAL. So any persons transacting in such a manner as to avoid TEAL will be
deemed to be acting as private or informal banks. Failure of formal or informal
banks to collect and pay over TEAL will attract stiff penalties.
At an informal level, cash and barter systems are inconsistent with a modern economy, have high risks attached to them and are simply too impractical to be deemed a serious threat to TEAL.
At an informal level, cash and barter systems are inconsistent with a modern economy, have high risks attached to them and are simply too impractical to be deemed a serious threat to TEAL.
Won't the cascade
effect of successive contributors to a manufacturing process, even of a small
levy, cancel the benefit of the removal of vat?
Nov. 10, 2011
TEAL does not just
replace vat, but all other state revenue, all of which have a cumulative cost
implication in the production process and which individually and collectively,
exceed the impact of TEAL in the production process. This should result in a
lowering of the costs and sales values of manufactured goods.
How Can I help get this wonderful System Implemented?
Support THE PEOPLES REFORM ACT 2013 with its many other reforming
proposals.
