A bit of history

We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

Winston Churchill
British Prime Minister

Taxation will never make any nation prosperous. It merely re-distributes the wealth from one group to another. The ASP would prefer that our taxes be minimized - so that we can keep our property and decide for ourselves where to spend our money.

Australia-1910Around 1910 Australia was a beacon of prosperity in the world. We had no foreign debt, had a large middle class, inflation was next to zero – while the largest tax revenues came from customs and excise duties on imported goods. It was only in 1915 that the Commonwealth government introduced an act for income tax to be collected.

Today - the Australian government has to collect about $346 billion of revenue to meet its expenditures. If we are to willingly hand over our money as a tax - then our tax system should be simple, fair and equitable.

guernsey-islandFor guidance in drafting our policies - we looked at history. Around 1820 (after the Napoleonic wars) Guernsey (an island in the English Channel) was in dire straits, both physically and financially. The people wanted to build some sea walls, roads and a marketplace for their goods. There was manpower and building materials aplenty – but limited money. Having been made aware of the problem, the governor of Guernsey responded with "Could not your parliament issue money?" Acting on these wise words - the government created the money and paid for these public works. The consequence was that the infrastructure was built, no price inflation ensued, and a national currency was introduced – all without any additional taxes or debt.

This incident is what has inspired both our monetary and tax policies.

For every benefit you receive a tax is levied.

Ralph Waldo Emerson
American Poet and Lecturer

The quote above is relevant to our current tax system - where the national currency is not created by the government.

guernsey-bankersSo what happens to the process of collecting taxes - when the government creates the national currency and then spends it into circulation? Adjacent is a reprint of a booklet first published in 1958. It tells the story of how Guernsey issued its own currency notes between 1819 - 1836, without increasing any public debt or taxation.

Below are a few extracts from this booklet:

In 1813 ... this island found itself with little or no trade, little or no disposable revenue, no inducement for the affluent to continue their abode, and no prospect of employment for the poor.

The Guernsey States from 1819 to 1836 manipulated the issue of notes to allow a number of public works to be carried out - without increasing the public debt.

The experiments continued over a period of 20 years, by which time the people of Guernsey had developed from a depressed unhappy state to a position of prosperity and happiness.