It is proposed that the present taxes on income - income tax, and other employees' and employers' national insurance contributions - should be abolished, and be replaced by a payroll tax paid by the employers, at a rate which would yield the same revenue as before. The employer would receive, for each worker, a tax-free allowance on the first L50 of wages per week.
The employer would therefore have a strong incentive to spread the available work among more workers, which would save him or her tax by bringing in more allowances.
Employers would have an incentive to provide more jobs for the unemployed. Instead of giving overtime to existing workers, they would seek to take on new workers, if possible part-timers. They would first engage any unemployed workers who already had the appropriate skills, and later perhaps take on new workers to train. If workers left or retired, or if production could be expanded, part-timers would be appointed to fill the vacancies. For if the same amount of work could be spread between more workers, every extra worker who could be engaged would reduce the employer's taxes. Likewise, when pay rises were being negotiated, employers would seek to include a reduction in the hours of the working week as part of the bargain, so as to be able to take on more workers, even if there were no opportunities to increase the total number of hours worked.
Dr David Chapman, Democracy Design Forum, Coles Centre, Buxhall, Stowmarket, Suffolk IP14 3EB (tel 0449 736 223).