A major public investment programme makes sense only so far as genuine investment opportunities are available. Only in the Keynesian model is public investment advocated regardless of real return – mainly as a means of distributing spending power. A regular Citizens’ Dividend removes the need for artificially boosting public investment – the money is likely to be much more effective in the private sector.

Another key step is to cut (or eliminate) taxes on production. Production taxes stymie the economy, create compliance cost, deadweight costs, avoidance and evasion. Greece needs this urgently. Over 25% of GDP is in the black economy, mainly to evade the cost of taxes. Average household bribery bills are put at 1700 Euros/annum, further undermining the productive economy.

The final challenge is to ensure a stable money system (in Greece’s case by eliminating deficit spending). With the Citizens’ Dividend and the elimination of Dumb Taxes, major new sources of government revenue are essential. Land Value Taxation, Carbon Taxation are the Smart Tax alternatives. Achieving stable money will not be possible without monetary reform, and this requires reform of the ECB. Paper currency, coins and bank deposits should all be exclusively issued by the public part of the banking system.

So the key elements of a New Marshall Plan for Europe must include drastic reductions in Dumb Taxes, a regular Citizens Dividend, Land Value Tax and Monetary Reform.

The smartest way of proceeding is to combine these steps is to do a tax-for-debt swap, swapping mortgage debt and payments across the Euro zone for land-value indexed tax payment to government, replacing lost bank equity with debt-free, interest-free ECB paper. This is the basis for the exciting new Land Value Covenants (LVCs) we’ve all been hearing so much about lately – Smart Taxation without the pain!

The arguments are presented in glowing terms, stating how much spending power would be obtained. But is very light on detail about the economic response and the ultimate bearer of the tax.

It’s clear that the spending power can’t be taken from the financial sector, since it doesn’t create any spending power to take. So the spending power must come from somewhere else. Most likely it will come from savers and investors of one sort or another. Businesses (shares) will be reduced in market value, land (house) prices will be reduced, and interest rates paid to depositors will fall. Some of the spending power will be taken away from other taxes (eg Corporation and Income tax).

The transaction volumes will be curtailed sharply and transaction spreads to the public will widen.

On the positive side, labour demand will be cut in the financial industry, promoting a transfer of top mathematical talent into productive industry. I envisage continued high bonuses in the sector of reduced size. The economic cost of much of the frequency trading (staff, modeling, software etc) will be saved as turnover tumbles.

On the negative side, it represents an expansion of state power as the private sector is further drained of vitality. It is an attempt to expand the tax taken for a new sink for public funds.

A far better way to help cut the size of the finance industry would be to introduce a Land Value Tax (LVT) and to nationalise the money supply. Doing this would remove the fuels which drive the bloated, parasitic finance industry – land rent and money issuance.

The Robin Hood Tax proposals address the right industry (finance) in the wrong way (through transactions). Transactions are not the problem. The problem is the industry subsidy through the state-granted credit creation privilege. By further diverting attention away from the key issues the campaign does the public a disservice.

In a system where virtually all transactions have a tax implication (VAT, Labour taxes, Stamp Duty etc), the government will take its cut in its own choice of money, regardless of what the trading partners want. In fact, the government will become very anxious if the accounting is in a private trade money but the tax is in government money. What is the exchange rate to be? How can the government be sure it is not being ripped off? This is why governments are so opposed to barter – how do you track or even define the tax to be paid? Who is seller, who is buyer?

Grignon’s “Bread Vouchers” would be great in a free market, but for the time being, we’re stuck with using what the bankers and their government forces us to use. The solution is simple. Abolish taxes on production and exchange. The government should issue its own trade money redeemable against land values, just like any other producer/consumer.

The key to monetary reform is to understand exactly how the banking cartel and its government work together to force a deeply destabilising and harmful product on an unwilling public. Reform will not be easy.