A WAGE FREEZE AT THIS TIME WOULD BE AN ECONOMIC DISASTER BEARING IN MIND THAT WE NEED TO INCREASE THE SPENDING POWER IN THE COUNTRY TO GET THINGS RIGHT.

NO ONE SEEMS TO KNOW HOW TO RUN A COUNTRY EFFICIENTLY?

I have come to the conclusion that I might be the only one. Here is a comment that was on the back of Baileys World of Economics published in 1999, Peter Bailey maintains that having completed a business analysis of the running of a country, he knows more about how an economy works and the operating of a country than any other person in the world today. It is extremely difficult to be the only one out of step and be arrogant enough to believe that even now, I consider that I am right.

I have just published a book, Its All In The Price, on the subject and obviously no one has read it. A copy was sent to the British Chancellor and obviously ignored, and so the people and the country continue to suffer.

Here is a definition of how the economy should work,

A community of people working to supply their own needs and wants, who may be organised by leaders and entrepreneurs into organisations and companies with tools and equipment to boost their productive capacity.
Monetary systems provide a means of payment to the workers that allows them to convert the result of their efforts into their personal requirements. The leadership will impose taxes and levies on the community to pay for its own expense and provide community services where necessary.

This definition shows that people should work to earn their living. Money provides them with freedom of choice in their needs and wants and money allows the business sector and government to work.

Let us now examine the tax systems and show who actually pays the taxes and when. It appears that no one seems to know even that. For instance my book shows that despite everything that says we pay income tax, we do not actually pay our taxes at that point. The employer pays its employees more so that they can pay the taxes. It would make no difference if it is changed to an employment tax. The employer then passes these costs on in the prices of the goods and services that he produces. The book shows how all these taxes are in fact paid by the consumer when he pays for his goods and services. All business taxes are passed on to the community one way or another.

Despite all the arguments that are going on about companies that do not pay their fair share of taxes, none of it really counts, it just reflects how little is understood about taxation.

No one has yet appreciated how the cost of employment can be reduced and spending power increased at one and the same time. This again seems a contradiction in terms, but it is in fact possible. The country has to compete in the market place and for capital investment. The best way is to get rid of income tax and bring gross pay down to net pay. This produces huge savings in the operating costs of business and also produces huge savings in government expense. It will encourage new investment and help to create jobs.

I have already explained that most taxes including income taxes are paid by consumers in the prices they pay. To hear that shops are closing and retail premises are empty is a disaster. It is vital to maintain spending power in the economy. I have just heard that in Australia internet companies do not pay VAT while other retail outlets do. If the consumer is paying his taxes through his purchases what will that do to the economy.

Austerity measures lead into recession and the more austerity the deeper the recession will be. Europe is in trouble. Some of the people seem to know the answer, they need to work, just to live, while the governments have no idea what to do. It is time to change. No one seems to have appreciated that tax revenues are a lot higher in a boom than in a recession. But does anyone, apart from me, know how to create and control a boom?

Have a good look at the system of taxation. The taxes will basically either increase costs and prices or decrease spending power or both. A prime example was the Poll Tax in Britain. It had many good points to recommend it but it hit the lower income groups and the teens who spend all their money. The result was that the cut in spending power put the country into recession and it did not come out of recession until the tax was removed.

Governments need to know a lot more about how the economy actually works and then they might realise that free health and education is a must for pure economic reasons. Why the present tax systems make countries uncompetitive and why they need to change.

Read the book, it is quite small and in a language the average person can understand, and get the answers. It is largely about getting people back to work and what governments need to do to achieve just that.

If you need advice contact:
Peter William Bailey
FCIS. ACMA. CGMA
4 Wellburn Drive, Ballantyne Park, Harare, Zimbabwe
Telephone +263 882531 email pwbailey@mweb.co.zw