Growing Our Own Future – While Helping Others Grow Theirs

1. Purpose of the UK Citizenship & Taxation Changes

To maximise the potential of UK Democratic and Constitutional Restructuring to spread national wealth and create a fairer society of equalised opportunity. By promoting business and innovation, employment, reducing reliance on benefits and enabling young people to achieve careers that realise their full potential – while increasing the performance of Public Services.

To achieve these goals by enabling each State to set its own rates of National insurance (for Pensions and Benefits) and Personal taxation – incentivizing taxpayers to contribute to a Federal Equalisation Fund to help other States develop their own economies. By the same token, giving each State the ability to choose the amounts it wishes to pay to welcome UK Immigrants.

Thereby to better enable the UK to meet essential domestic and international commitments – such as for Security and Defence. Improve the UK’s financial global standing – reducing the interest rate it must pay on its National Debt and to pay it down – so it becomes less of a burden to future generations.

2. UK Citizenship & Taxation Framework

UK Citizenship would remain under management of the Federal Government (The Home Office). The division of responsibilities at the Federation and Sate Levels as in these examples:-

At the Federal level (Funded from Non-Personal Taxes): Commercial & Criminal Law, Defence & Security, Foreign Policy, Monetary Policy, National Standards, UK Water, Energy & other Infrastructure Planning, Cross-Border and International Transport, Border Security, Federal Wealth Equalisation.

At the State level (Funded from Personal Taxes): State Civil Law, Police & Public Safety, Local Service Design & Delivery (Healthcare, Education etc), Business Development, Local Transport, Water & other infrastructure. National Insurance used to fund State Pensions & Benefits and (separately) the State Benefits to be paid to Resident Non-Citizens (immigrants etc).

In 2025/26 fiscal terms, this arrangement aligns with the current spending framework – with a total Federal funding of about £317bn and total State funding of about £217bn. The central Westminster Government now able to fund and concentrate on ever-more critical Defence, Infrastructure and Global issues – with Personal Taxes unaffected while each State governs itself.

3. State Civil & Taxation Framework

Under our reforms, each State has full autonomy to set its own Personal Taxation policy (within limits set by a Federal Act of Parliament), able to prioritise its own Revenue and Capital requirements. Some States may choose a low‑tax, high‑growth “Singapore‑style” model; others may prefer a high‑tax, high‑welfare Nordic model; most somewhere in between.

Combined with the ability to set their own National Insurance rates, this places Personal Tax, State Pension and Welfare policy directly in the hands of each State’s citizens (via their elected MPs), whilst still operating within a democratically-established UK‑wide taxation framework.

4. UK State Residency & Civil Funding

State Residency is based on the citizen’s sole or main residential address – regardless of where they earn their living in the UK – or where they happen to be in the UK at any given time. The principles of State funding are as follows:

• State Pensions change to align with the EU norm – citizen’s own contributions being legally defined as our own money (rather than unfairly treated as withdrawable “Benefits” under Government Control).
• State Pension, Benefits & Welfare funding is entirely from Employer & Employee National Insurance.
• State Accommodation and Benefits paid the resident State Non-Citizens (including immigrants) is separately and similarly funded by Employer and Employee National Insurance Contributions.
• HealthCare and Socialcare funding are left under the democratic control of each individual State – funded from National Insurance and/or Personal Taxation and/or by other means (subject to Federal Standards on Data Architectures, Medical Standards and NHS Staff Pay Scales).
• Other State Civil Funding Needs from Personal Taxation and/or by drawing on a Federal Equalisation Fund (see 5 & 6 below).

A standard “Residency Eligibility Period” would apply (changeable only by a Federal Act of Parliament) for those citizens that had previously lived in a different UK State. For example, Income Tax / NI Eligibility could take 3 years, Civil Law eligibility 5 years and Inheritance Tax /Stamp Duty eligibility 10 years. During that period, the citizen’s previous State’s policies would apply.

5. Hybrid Income Tax

5.1. Motivating & Rewarding Work & Economic Growth

A key objective of UK Federal Evolution is to generate employment, motivate work and get people away from being dependent on Benefits. To drive UK innovation and economic growth – both for more money in pockets and to better fund Health & Socialcare & other public services. To achieve these goals, the UK Federation would use a system of Hybrid Income Tax, where:

• Individual States set their own rates of Employer and Employee National Insurance to fund State Pensions. Also for State Benefits (separately for resident Citizens and Non-Citizens).
• Individual States establish their optimum balance between Personal Taxes and Welfare Funding – setting there own Tax Rates within income levels established by a Federal Act of Parliament.
• Wealthier States become economically motivated to contribute to the economies of poorer ones – by means of a Federal Equalisation Fund.

5.2. Hybrid Income Tax – Federation-Level Process

5.3. Hybrid Income Tax – State-Level Process

Each Tax Year, each State democratically sets its own Income Tax Control mechanism – called “The Federal Tax Threshold”. This relates to the UK-wide average full-time earnings in the previous tax year – within limits set by a Federal Act of Parliament (currently proposed at between 0 and 7.0) where:

A value of zero. Indicates that the State does not wish to contribute to the UK Federal Equalisation Fund – but wishes to keep all its Personal Taxation for its own internal purposes.  In this case, the State must set its Income Tax Rates to the same, or higher than, the Federal Income Tax Rates.

Any value between 0.1 and 7.0. Indicates the State wishes to set its own Income Tax Rates and also contribute to the UK Equalisation Fund.  This entitles it to set its own Tax Rates – up to its chosen Federal Rate Threshold.

For example: If “UK Average Earnings” were £40K, a Threshold Value of “4.1” would mean that the State sets its own Income Tax Rates up to earnings of £164k (£40k x 4.1). Beyond that, the Federal Tax Rate applies (but only if higher) – leaving all earnings up to £164 still taxed at the State Rate. The difference between the tax they ACTUALLY paid and WOULD have paid (at the lower State Level) is then credited to the Federal Equalisation Fund.

6. The Federal Equalisation Fund – Spreading Wealth

The Federal Equalisation Fund (credited as 5.3 above), becomes managed by the Federal Government to become a funding pool from which States can borrow at a nominal rate (or even interest-free) to fund their own economic development – spreading wealth under Federal Treasury due diligence.

Should the Federal Government run a surplus, it would have the option of crediting the Federal Equalisation Fund. However, it would not be permitted to draw on it – therefore needing to cut costs, raise Fiscal Revenues or (as a last resort) increasing National Debt.

7.  Democratisation of Immigration.

In the same way that individual States democratically establish Benefits for resident Citizens, they also establish Benefits for Resident Non-Citizens. It is currently estimated that each Illegal Immigrant currently costs English taxpayers some £41k each year. This cost would now be borne by Individual States. So the more-sympathetic States would likely give high levels of accommodation and Benefits -while others would likely provide less. The choice of Resident State being left up to each individual immigrant.

8.  Impacts of a Federal UK on the London Economy

The existing Greater London Authority would be absorbed into the new State Government of London, with City Hall becoming the seat of the London State Parliament. The current Mayor and Assembly would transition into the State’s First-Minister and Legislature, while all GLA functional bodies — including TFL, the Metropolitan Police, the London Fire Brigade, and the development corporations — would convert directly into State‑level agencies.

As with all other States, Funding would shift to its own State‑established system of Personal Taxation – its high-earners individually crediting the UK‑wide Federal Equalisation Fund by the system of Hybrid Income Tax. London becoming the financial engine of the overall UK federal system – in charge of its own destiny – whilst driving the spread of wealth to other States.