Seizing the moment

People understand that the government’s response to the coronavirus pandemic must be paid for, and this will probably mean tax increases.  An Economist leading article, Seize the moment, points out that low energy prices make now a good moment to tax carbon emissions.  This would “steer the economy away from carbon”, to help combat climate change, and it would “help repair battered government finances” after the huge costs of the coronavirus pandemic.  Private capital would be attracted to developing climate-friendly technologies for transport and generating power.

Governments need to increase their tax revenues without choking an economic recovery.  A land tax would do just that, whilst also helping to address the housing shortage.  It would incentivise developers to build on land they already own, or sell it, rather than let it be a drain on their finances.  It would encourage landowners large and small to release more land for building.  Empty offices could be converted into low-cost housing.  Governments would see increased tax receipts from the land tax itself and from the economic growth in the construction industry.  And more young people would be able to buy their own homes.

There will never be a better time, politically and economically, to simultaneously increase tax revenues and achieve long term objectives for the public good.

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