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Transaction Tax - Our only hope for prosperity.

If there was one graph that tells the story of our economics woes, then this is it. Tax revenue as a percentage of Gross Domestic Product (GDP).

The population of Heladiva (Sri Lanka) and Australia are similar in number. In 1990, the Tax revenue as a percentage of GDP for Heladiva, Australia and Sweden was around 20%. All three countries were relatively prosperous in 1990 as a result. 

This ideal 20% is a sustainable, moderate figure. It provides sufficient revenue for smaller governments which are more effective at governance, enforcement and reacting to arising opportunities and threats. It also enables private enterprise to thrive, creating overall prosperity in the economy. 

When the politicians in Heladiva gave large tax cuts and free benefits to the people over the years, the government revenue dramatically declined below this ideal 20%  (see graph above). The result was an unprecedented economic crisis. With poor tax receipts, the government was unable to pay its bills. With limited supplies and high prices, the people suffered greatly. In 2021 Heladiva tax revenue as a percentage of GDP was a mere 7.4%. 

When an economy is above the ideal 20% as it is in Sweden, we see big governments demanding more taxes to sustain it. Enterprises drown in red tape making them inefficient, unable to grow and less likely to employ people. With high taxation rates comes higher prices. As the cost of living rises and job opportunities decreases the people suffer and become dependent on the State. In 2021, the social democracy of Sweden's tax revenue as a percentage of GDP was 27.2% 

It has been proven time and again that the communist/socialist ideal of equal outcomes for all does not work. Time and again the people suffered as a result. Giving free stuff to the masses or robbing the rich to give to the poor is not good economics. In 2021, Australia, a liberal democracy recorded a moderate tax revenue of 23.0% of GDP. Unfortunately for Australia, the trend is rising towards the situation in Sweden.

A thriving economy is one where people have jobs, the jobs pay well, the people can afford to buy the goods they need, they can start their own enterprise and make a profit, which in turn can employ more people. With equal opportunity for all, the economy will grow and rise like an incoming tide.

The only tax that an economy or government needs for prosperity is a Transaction Tax set at the ideal 20% taxation rate. All other taxes in the economy will be redundant (e.g. income tax, payroll tax, land tax, inheritance tax, stamp duty, capital gains tax, excise tax, sales tax, GST/VAT, levies etc.) making taxation simple, transparent and efficient.

The universal Transaction Tax applies to every financial transaction between two or more entities. The taxation rate is set at 20% and the entity that receives the money pays the tax. It is simple and effective on many levels. (To learn more about the Universal Transaction Tax, visit the Hela Economics page.)

If we are to achieve prosperity in our time, we need to implement the universal Transaction Tax and remove all other taxes. This needs to be done as soon as possible to prevent another economic crisis.

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