Put people in charge of their taxes and what happens?

Phil Byrne

12 August 2015

What do women, the working poor, young people, future generations and the environment all have in common?

They’ve effectively been abandoned.

The way the Government is raising, borrowing and spending its money is sacrificing their wellbeing.

Working parents are having to use food banks to feed their families. The number of affordable homes has plummeted. Youth clubs, playgrounds and community services like mental health have been cut. More than a million households can’t afford to heat their homes properly. Help to insulate homes has been scrapped. Money is being taken away from clean energy. And as air pollution breaks safety limits, the Government decides to cut incentives for cleaner vehicles.

Amidst the austerity, it seems we can still afford to contribute to the private education of the rich. And splash millions searching for climate-wrecking oil and gas.

It’s infuriating. Ludicrous. Wouldn’t it be much better if we all had a greater say on how tax is raised and spent?

How we raise and spend money – what we choose to subsidise, and therefore make cheaper and more desirable – affects who we are socially and morally. For example, putting a colossal tax on gated luxury apartments while spending the money on affordable social-housing projects would say that we value sharing over individual greed.

Except, as things stand, we can’t decide anything. Instead, the closeted elite in the Treasury choose.  

We hear about the Government granting more decision-making powers to Manchester and other English cities. But don’t be fooled. This is devolution-lite: no new tax raising powers, no powers to control the price of homes, no powers to abolish the bedroom tax, no powers to control what types of energy that’s produced.

It could be so very different.

People in a southern city in Brazil have been voting for years on what to spend their taxes on. It’s called participatory budgeting (PB).

They even pressured the city council to raise taxes.

Don’t be surprised. When you have no say in where your taxes go – and little faith in your government to spend them properly – you’re begrudged to part with the cash. But if you could play banker, and see the benefits locally, you might want more money to play with. Those Brazilians apparently did.

Participatory budgeting (PB) puts citizens in charge of part of a municipal budget. Ordinary people are given the financial skills and knowledge to exercise power.

Professor Harriet Bulkeley of Durham University argues that PB is a good example of how cities can enhance wellbeing for everyone – especially significant given that 75% of the world’s population could inhabit cities by 2050.

The mayor established Participatory Budgeting (PB) in Porto Alegre to oppose a climate of corruption and political favours.

PB became popular. Citizens wanted a say on where the council should invest, e.g. housing, health care and public transport. But most striking is who these people are; significant numbers from the poorest regions of the city. In Porto Alegre, PB is empowering people who are normally the victims of other people’s way of life.

How is it doing that? Assemblies represent each region of the city. People attend their nearest assembly to vote. The Council considers criteria like the need of each region, population and the number of participating citizens.

For example, in 1997 the regional assemblies prioritised street paving. Extremo Sul got nearly 10% of the investment. Centro received only 4.2%. Extremo Sul had a much greater need for pavement than Centro. But the latter had a much bigger population. Both were taken into account.

Bear that in mind when I tell you that London gets 24 times as much spent on infrastructure per resident than north-east England.

You might think that given the chance to vote, we’d be irresponsible or selfish. Actually, it appears that people become more aware of the situation and needs of others, and environmentally friendly.

In Porto Alegre primary health care’s been set up in poor areas, the number of schools and nursery schools has increased, and most households now have access to water and waste-water systems. They also voted to depollute the river and beaches, and restore the public market.

PB has so far been restricted to voting on how money is spent – not borrowing and procurement. It’s no good having the keys to the vault if it’s full of IOUs or it’s frittered away badly. 

But this isn’t a flaw of PB. It’s an argument for it. PB gives people a greater appetite for engaging in financial decisions – think of the people in Porto Alegre who demanded a tax rise. It encourages them to ask ‘why aren’t there more resources?’

Could that then lead to more responsible borrowing and contracting? Could it prevent wasteful examples like Birmingham City Council paying contractors £2,000 for each sapling they planted in 2013? I think so.

Proper devolution is a real opportunity to fight back against inequality, and in doing so, enhance our wellbeing and the environment. We want people in control of decisions, not business and political elites – or “middle-class, middle-aged guys” as Mhairi Black, the UK’s youngest MP, calls them.

With that in mind, how would you raise taxes – and what would you spend them on?

Cities working for people

Luxury tax Increase