Title: The Taxation Democratic Consent Act
An Act to mandate that any increase in central government taxation in the United Kingdom requires approval through a national referendum or a general election manifesto commitment with detailed impact examples, overseen by the Electoral Commission, with a temporary emergency clause requiring retrospective approval and reversal, explicitly excluding local taxes.
Objective
To discourage unnecessary or excessive increases in central government taxation by ensuring they are subject to direct public approval, with detailed transparency on their impact across an expanded taxpayer wealth scale, enhancing democratic accountability, and including a limited, tightly defined emergency provision to balance flexibility and oversight.
1. Definition of the Policy
The Taxation Democratic Consent Act (TDCA) shall apply to all central government taxation levied by the UK Government and require the following:
- Tax Increases: Any proposed increase in existing central taxes (e.g., Income Tax, VAT, Corporation Tax, National Insurance, or excise duties) or the introduction of a new central tax must be approved by one of two democratic mechanisms:
- National Referendum: A public vote explicitly detailing the tax increase, including its rate, scope, and purpose.
- General Election: Inclusion of the tax increase as a clear commitment in the manifesto of the political party that wins the election and forms the government, with specific details as outlined below.
- Manifesto Detail Requirement: The manifesto must specify the exact tax increase proposed (e.g., “increase basic rate of Income Tax from 20% to 22%” or “raise VAT from 20% to 21%”) and include examples of its impact on taxpayers across an expanded defined scale of wealth:
- Low-income taxpayer (e.g., earning £20,000/year): “An additional £400 in annual tax.”
- Middle-income taxpayer (e.g., earning £50,000/year): “An additional £1,000 in annual tax.”
- High-income taxpayer (e.g., earning £150,000/year): “An additional £3,400 in annual tax.”
- Very high-income taxpayer (e.g., earning £1,000,000/year): “An additional £24,400 in annual tax.”
- These examples must be based on typical household profiles and published in the manifesto to ensure voters understand the real-world effects across income levels.
- Tax Reductions: Reductions in central taxation, whether temporary or permanent, are exempt from this requirement and may be implemented without public vote or manifesto pledge.
- Emergency Clause: In exceptional circumstances, the government may enact a temporary tax increase without prior approval, subject to:
- Definition of Exceptional Circumstances: Limited to war, major natural disasters (e.g., nationwide flooding or earthquake), or severe economic collapse (e.g., GDP drop exceeding 10% in a quarter), and requiring a two-thirds supermajority vote in the House of Commons to authorise.
- Retrospective Approval: Within 12 months of enactment, the government must call a general election where the manifesto of the incumbent party details the emergency tax increase, its impact (using the same expanded wealth-scale examples), and its cost to taxpayers. Approval is granted if the party wins; otherwise, the tax increase is voided.
- Reversal Deadline: The emergency tax increase must be reversed within 12 months of enactment unless retrospectively approved via the general election.
- This clause ensures flexibility in tightly defined crises while upholding democratic accountability.
- Exclusion of Local Taxes: This Act applies only to central government taxes and explicitly excludes local taxes (e.g., council tax, business rates). A separate policy proposal could address local taxation increases via local elections.
2. Oversight and Enforcement
A robust enforcement structure will ensure compliance with the TDCA:
- Role of the Electoral Commission:
- Granted statutory authority to oversee and enforce the democratic consent process for central taxes.
- For referendums: Approves the wording of the question, supervises the campaign process, and certifies the result.
- For general elections: Verifies that any tax increase enacted by the winning party was explicitly outlined in its manifesto, including the required detail on the exact increase and expanded taxpayer impact examples.
- For emergency increases: Monitors compliance with the supermajority requirement, 12-month reversal, and retrospective approval deadlines, with power to escalate non-compliance to the courts.
- Process:
- Referendum: The government submits a proposal to Parliament, followed by a vote to trigger a referendum within six months. A simple majority is required for approval.
- General Election: The tax increase, with detailed impact examples, must be in the party’s manifesto, published at least six weeks before the election. Post-election, the Electoral Commission confirms compliance before legislation proceeds.
- Emergency Increase: The government must secure a two-thirds Commons vote and notify the Electoral Commission within 7 days of enactment, triggering a 12-month countdown for reversal or election.
- Sanctions: Any central tax increase implemented without democratic consent (outside the emergency clause) or failing to meet manifesto detail standards shall be deemed unlawful, with the Electoral Commission empowered to seek judicial review to block it.
3. Scope
- Applies to all central taxes under HM Treasury’s control, including but not limited to:
- Income Tax
- Value Added Tax (VAT)
- Corporation Tax
- National Insurance Contributions
- Excise Duties
- Capital Gains Tax
- Inheritance Tax
- Includes any new central tax proposed by the government.
- Explicitly excludes local taxes such as council tax and business rates.
5. Rationale
This proposal ensures central tax increases are transparent and accountable, with detailed manifesto examples across an expanded wealth scale making the impact clear to voters, discouraging governments from imposing hikes without strong justification. The tightly defined emergency clause, requiring a supermajority and retrospective approval, balances crisis response with democratic principles, while excluding local taxes keeps the focus on national fiscal policy.
