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Why is central government always sovereign over local government?
There are two principal reasons for the current dominance of central government. One is the fact that historical shifts of power broke the link between local government and the Lords (who, of course, were originally local rulers). We say more about this in the section on Local Autonomy where we propose that the House of Lords should be reformed so that its members are appointed by democratically elected Local Authorities. As well as restoring the integrity of Parliamentary Sovereignty, this would give local government a voice in the legislature which would enable them to demand a reasonable degree of autonomy.
The other main reason for the dominance of central government lies in the convention that taxes must be paid in a fungible form (i.e. in money) rather than in labour. As well as being a root cause of inequality faq this also makes it easy for taxes to be paid directly to central government (whose control of the legislative process allows them to take as much of it as they like).
Why should people have the right to pay taxes in labour?
We propose a constitutional right for people to pay taxes in a form which they have a natural capacity to supply – i.e. labour – because we regard the obligation to pay taxes in money as one of the root causes of inequality; it makes taxpayers subservient to those who control the money supply, by creating an obligation to obtain money from people who are under no obligation to part with it.
This would be a major change because it’s only at the very local level that it’s feasible for taxes to be collected in labour; for practical purposes direct taxation of the individual by higher levels of government requires taxes to be collected in a fungible form. But recognising a right to pay in labour would provide a dimension of democratic accountability which is currently lacking, since it would signal disapproval of the system as a whole.
We are not, of course, suggesting that taxes must be paid in labour, and we don’t anticipate that most of it ever would be – most people will probably always find it more convenient to pay in money.
Wouldn’t this reform unduly benefit people in rich areas? What if all the rich decided they only wanted their taxes spent on their localities and not on things that would benefit the wider community?
Local government will still be operating in a framework defined by national legislation and those things which genuinely need to be done at national level will still need to be financed. Individuals opting to pay their taxes to local rather than central government will be shifting responsibility for providing that finance from themselves as individuals to their local community, who may therefore be required to either pass funds up to the centre or provide services themselves which were previously supplied by central government.
In the absence of other changes, the only substantive difference would be that, instead of money going to the centre and then being channelled downwards, it would be channelled upwards through local government. What it would do, however, is give the public a way of indicating how they think power and responsibility should be divided between central and local government.
Even under the existing system, that would significantly strengthen local government in negotiating with the centre over where responsibility for different functions should lie. In conjunction with our primary goal of giving local government a voice in the legislature (Local Autonomy) it would allow the public’s priorities to manifest more explicitly, because it would make it possible for votes within the legislature to be weighted according to the distribution of funds.