Reuters has reported that:
Private equity investors are threatening to leave the Netherlands due to a proposed law that could raise the tax they pay on investments to as much as 52 percent from 1.2 percent currently, investors said on Wednesday.
"If the government is proceeding with this law there is no reason for us to continue our activities. We will seriously consider going to do something else," said Floris van Alkemade of Solid Ventures, a company which has invested in six Dutch IT start-ups.
So here's a simple question? If these market participants think that their activity is only viable with a tax break (also known as a tax subsidy: they're one and the same thing) should they be happening?
You can be sure they'd argue against any state subsidy to a nationalised industry. Why is it OK then for a private equity operation to have that subsidy?
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Dear Richard
Thanks again for your articles. This one abt the Netherlands is spot on – esp if one considers the wider speculative activities of finance/stocks. Stocks which were after all, invented to reduce the cost of borrowing/power of banks threatening foreclosure etc a very long time ago. Can you please comment on whether the proposals we have made for an Environmental Tax on Imports (ETI – published on the Treasury Select Committee 14th report 2007 into Globalisation and the Real economy) and the Credit Money Banking Adjustment (CMBA – to facilitate ETI) could be shared more widely and whether you are in favour of them as a means of reducing the profit from the speculative activities and regain stability without a 51% tax which might become necessary to Save Our Souls when inundation begins to happen in earnest?
Ian Greenwood
PS I received the following several comments from two people summarising their views on our two complementary proposals and will send you separately Bill Davies’ spot-on suggestion for 100% registered money for your comment.
Some notes from a global economist, lecturer and barrister: Professor Rodney Shakespeare
Ian
Thanks for writing. These are excellent, practical papers which are highly relevant to the need for policy change.
Case study for renewable energy
You are right that lower cost is the main way to get clean renewable energy. You then point out that governments are short of funds for subsidy and you propose a tax to provide the funds. There is nothing wrong (and everything right) in what you say except that the scale of the problem is such that it is doubtful if there is any real solution without a colossal change of paradigm and associated large-scale new financial solutions etc. Obviously we must work together to get the change and the required new financial policies.
ETI proposal
Much splendid stuff here — I like the organic sea barriers. The world will pay a heavy price for mangrove destruction
CMBA Treasury
This has excellent analysis. As regards the required alternative solution, the claim for the present system is that it allocates resources efficiently. This claim is nonsense but any alternative must show that it allocates resources much more efficiently and addresses the question of ensuring that productive capacity (and the associated consuming capacity) becomes more widely spread. Just getting the interest money back to the Treasury insufficiently answers the questions of how to spread productive capacity and get going the environmental capital projects etc. But your proposal is certainly a step in the right direction and is part of the new thinking seeking new answers.
STEER money.
Yes, the need is for people to unite behind a single, main idea.
Depriving the banks of interest is a positive idea — well done — but it should not deprive the banks of administration cost (and administering banks are required in modern economies). At the same time the banks should be used to administer interest-free loans for developing and spreading productive capacity etc.
I think the comprehensive scale, humaneness and originality of your thinking and look forward to further contact when you are back from Australia in February 2008.
I would be delighted to receive a copy of the Treasury letter of July 2007 (if you have one) saying that the commercial banks create money
Rodney
Thanks Rodney – CMBA does partway return the money for climate change investment, but I agree that the rest of it needs to be hypothecated (specifically attached to relevant projects). What about another area being loan funds for stabilisation at interest of any wobbly banks, guaranteeing against a run, so depositors can never lose money, only banks can lose if a loan defaults which was not based on re-issued deposits? We may need a system to “tag” deposits?
With regard to differentiating the recording of existing money and ‘new’ (credit/debt) money in the banking and financial system, apart from the draft bill for the American Monetary Act, which requires the electronic tagging of re-deposited loan credit/debt-money amounts [this is able to be viewed on the American Monetary Institute’s website (www.monetary.org) – on this can also be viewed Stephen Zarlenga’s refutation of the ‘Austrian School’ of Economics and its misrepresentations on the origin of money], I refer you to Bill Davies from South-East Scotland, who who has been working on this (as 100% registered money) in a detailed way for some years. I will forward you some recent e-mails to me from Bill Davies for your perusal.
With regard to other calls on the need for ‘richer’ countries to fund (reimburse) ‘poorer’ countries for incentives and projects to conserve the biosphere, I give the following anecdotal information and refer to likely sources:
At the 2008 Auckland Writers and Readers Festival, I attended a discussion session with John Gray (latest book titled “Black Mass”) and Loretta Napoleoni (latest book titled “Rouge Economics”) – both of whom are or have been associated with the London School of Economics, usually known to be a very orthodox institution – in which both authors expressed the need for the people in countries which still have rainforests to be paid not to cut them down by those countries which no longer have much or any rainforest and emit an excess of carbon above the capacity of their vegetation to deal with it. I presume this and other measures are covered in their respective books. It was John Gray who raised the issue of conservation of the biosphere as one of the most pressing things humanity must face up to very soon. I think the ETI/CMBA (and CCC) proposals are a relatively quick and easy way to achieve the funding for this, within the constraints of the prevailing mind-sets. With regard to differentiating the recording of existing money and ‘new’ (credit/debt) money in the banking and financial system, apart from the draft bill for the American Monetary Act, which requires the electronic tagging of re-deposited loan credit/debt-money amounts [this is able to be viewed on the American Monetary Institute’s website (www.monetary.org) – on this can also be viewed Stephen Zarlenga’s refutation of the ‘Austrian School’ of Economics and its misrepresentations on the origin of money], I refer you to Bill Davies from South-East Scotland, who who has been working on this (as 100% registered money) in a detailed way for some years. I will forward you some recent e-mails to me from Bill Davies for your perusal.
With regard to other calls on the need for ‘richer’ countries to fund (reimburse) ‘poorer’ countries for incentives and projects to conserve the biosphere, I give the following anecdotal information and refer to likely sources:
At the 2008 Auckland Writers and Readers Festival, I attended a discussion session with John Gray (latest book titled “Black Mass”) and Loretta Napoleoni (latest book titled “Rouge Economics”) – both of whom are or have been associated with the London School of Economics, usually known to be a very orthodox institution – in which both authors expressed the need for the people in countries which still have rainforests to be paid not to cut them down by those countries which no longer have much or any rainforest and emit an excess of carbon above the capacity of their vegetation to deal with it. I presume this and other measures are covered in their respective books. It was John Gray who raised the issue of conservation of the biosphere as one of the most pressing things humanity must face up to very soon. I think the ETI/CMBA (and CCC) proposals are a relatively quick and easy way to achieve the funding for this, within the constraints of the prevailing mind-sets.