Contingent loans to reduce taxation and greenhouse gas emissions

The same model - with situation variables - could be used to finance and develop any community infrastructure including water systems, urban transportation systems, Broadband infrastructure, medical facilities, child care, and education. This would remove the need for many transfer payments made by government and would reduce the need for taxes thereby enabling the government to give ongoing tax cuts.

Effect on the government budget

As the money is new money it does not have to be supplied from existing taxes so it will make no demands on the government budget.

How quickly can it be implemented?

It can be implemented, in a small way, within three months and can cover the entire country within two years.

Won't it cause inflation?

It need not cause inflation because the money has to be invested in productive assets. If too many loans are issued for a particular purpose then the money for that purpose will inflate but that will only affect those people holding those loans.

If all new money is created through this system the outcome can be zero inflation for the whole economy if the government adjusts the amount it takes from the taxes it collects to pay off the zero interest loans.

Won't it be hard to enforce compliance?

All markets in this system are voluntary. That is, both buyers and sellers agree to participate in the markets and agree to the terms and conditions of the market place. If they break the rules of the market then they are banned from that particular market place and they do not receive any new loans and nor are they allowed to sell through the market place. The cost of compliance, including government compliance costs, can be covered by the merchant fees.

Summary

The system proposed is a generalisation of the idea of contingent loans with their known benefits. It can be introduced quickly and different market places can be set up for different policy issues.

Policy can be implemented by building a targeted system to achieve policy outcomes rather than by trying to regulate the large complex overall economy to achieve a specific policy goal. This approach will reduce the demands on the taxation system to supply money for community wealth; creating infrastructure.