Brixton Pound Launched

The Brixton pound was launched last week at an event at Lambeth Town Hall in South London. Local currency initiatives are popping up all over Britain. Totnes and Lewes, Sussex are the oft-quoted examples of local “pounds” already in circulation; and this week Brixton became the first urban community to launch its own currency. What are we to make of this phenomenon?

If you buy something in a shop using regular UK pounds, you pay VAT on top and of the net amount something like 44% goes in tax under various headings such as Employees and Employers National Insurance and PAYE income tax.

If payment is in the local currency and is not declared as an earning then there is a barter situation in which goods and services are exchanged at their true value without the tax authorities taking their cut. This is of particular advantage also to people who are receiving some kind of means-tested benefit. As soon as the situation with local currencies is completely regularised, the schemes inevitably collapse.

Local currencies are a way of getting round the problems caused by the tax system which blocks free exchange of goods and services. We need a tax system which does not impact on economic activity. Land value taxation is such a system but vested interests all the way across the political spectrum block it and surround the subject with fear, uncertainty and doubt.