Progressive Budget

The Liberal-Tory Government has claimed that its Budget was “progressive”. The Institute For Fiscal Studies has challenged that description. Not surprisingly. According to one analysis, although the top 10% of income earners are the worst affected by the Budget the next worst affected are the worst paid 10%. Moreover, the fact that the top 10% are worst affected does not take into account the fact that they are far better placed to suffer than are the worst paid 10%.
On the “Dispatches” programme the other night about how to save £100 billion, one Consultant said that it was quite reasonable for a Public Sector worker earning £25,000 to lose £3,000 in pay cuts, and additional pension payments. The question I would have asked her is, are you then prepared to hand over all of your income above that £22,000 for the good of the economy? If not why not, if we are “All in this together”.

But, this way of presenting things is in any case dishonest. The same is true about the proposals for withdrawing benefits from better off workers and middle class families. The fraud is perpetrated by confusing income with wealth. The wealthiest people are by no means those with the highest income as traditionally understood. The wealthiest people rather are those that own Capital, and whose wealth grows exponentially not from income, but from the growth in the value of that Capital. Unfortunately, sections of the Left that have abandoned the traditional Marxist position that real changes in wealth and power can only arise from changes in ownership of the means of production, and substituted it for it the old Fabian notion of redistributive Socialism have been accomplices in the Right pulling off this fraud. The reality is that this redistributive Socialism is not only Utopian, but what it really means is creating a division within the working class, and between the working class and its natural allies within the middle class, because rather than redistributing wealth and power from Capital to Labour, it merely redistributes within Labour, from better off workers and the middle class to poorer workers, and the underclass.

Consider the position with Universal benefits. There were rumours that the Tories intended to withdraw some Benefits from those who it was claimed did not need them. But hold on. If I pay my car insurance as I am required to do to cover the possibility that I might have an accident, I do not expect the insurance company to turn round and say, we'll have your premium, but we won't pay your claim, because you can afford to pay for the damage yourself!!! If I am likewise being asked to pay National Insurance to similarly cover unforeseen events, such as unemployment, ill-health, and so on, or to cover known events where an income or payment is required, such as retirement, or having children, why on Earth should I not likewise be entitled to a payment under that insurance scheme. If I can't, then I should have the right not to pay into such an insurance in the first place!

Of course, the left that has collapsed into a bourgeois redistributive socialism sees something progressive in such an idea, even if it generally opposes Means Testing. It has turned its attention from the real enemy Capital, into a short-sighted politics of envy against the Middle class, that ends up extending to better paid workers too. But, of course, the true rich, as opposed to the Middle Class are unaffected by this. They are so wealthy that paying for private healthcare or education are insignificant for them. And because their wealth is based on the ownership of Capital not on earned income, they are unaffected by income taxes, and largely by taxes on Capital too.

Forbes Magazine commented a few years ago,

“According to a newly published study by accountancy firm Grant Thornton and commissioned by the Sunday Times newspaper, U.K. billionaires paid income tax totalling £14.7m ($29.1m) on their £126 billion combined fortunes last year, and only a handful paid any capital gains tax.

Grant Thornton estimated that three in five billionaires paid no personal income taxes, although they would have paid indirect taxes such as value-added and council (local authority services) taxes. Business income would have been tucked away in offshore trusts and companies. Most of the rest who did pay taxes would have paid themselves in dividends rather than with a salary. Dividends are taxed at an effective rate of 25% rather than the 40% higher rate of income tax."

Forbes

Yet, the Liberal Tory Government – by the way why do the Liberals and Tories both get to put up spokesepeople against Labour on TV now they are effectively one Governing party? - did nothing to tax Capital in the Budget. The Liberals during the election had proposed a Mansion Tx to fund their increase in Income Tax allowances to £10,000. Not only did the latter not happen, but their was no sight of the former. The Tories had proposed a tax on “Non-Doms” to fund their Inheritance Tax giveaway to the super rich. Again there was no sight of that either. On the contrary, the Liberal-Tories have given money back to Capital in a number of ways. They have reduced Corporation Tax, which means that the asset value of Capital will rise accordingly increasing the wealth of the billionaires, and will also mean more profit is available to be paid out in those dividends referred to above that the billionaires largely pay no tax on either. In addition they have given employers a reduction in the National Insurance contributions they have to pay, but have given no such concession to workers.

The Liberal Tories claimed that they had no choice but to raise VAT, which will hit the poorest hardest. But, the above shows that they had lots of options. In Spain if you spend more than six months of the year in the country you become subject to Spanish taxes whether you live there or not. Spain has a Wealth Tax, which is payable on your Global Wealth, not just your assets in Spain. If the Liberal-Tories had introduced such a Wealth Tax at a rate of say 10%, they could have raised billions of pounds from all of those billionaires like Lord Ashcroft.

But, there was another way the Liberal-Tories could have raised all the money needed to pay off the deficit without affecting ordinary working class and middle class people. Regularly, we see that there has been a bad day on the Stock Exchange where the fall in share prices has wiped hundreds of billions of the value of shares. The total value of shares in the FTSE 100 is more than a trillion pounds. If the Government simply raised a tax on that Capital Value of 10%, it would raise £100, billion plus. It could do that quite easily. All it would need to do would be to require that every Limited Company, issue 10% more shares, and hand those over to the Government. The Government could then simply sell those shares, and pay off the debt with the proceeds. That would not affect the profitability of the companies, it would not affect their ability to invest and so on. It would, however, do what the Liberal-Tories claim they want to do, it would mean ensuring that those with the ability to pay did so, whilst protecting everyone else.

The Liberal-Tories say they want to involve all of us in determining what cuts should be made. We should take them at their word, as well as their claim to want to ensure that “We are all in this together”. The LP and Trade Unions, and the Co-operatives should organise Labour Movement conferences in each area to discuss the Cuts, and to place before the majority of working class and middle class people the facts, and the kinds of alternatives suggested above. The Liberal-Tories have already adopted the Thatcherite Mantras of the 1980's such as TINA (there is no alternative), and that unemployment is a price worth paying. Its nonsense there are always alternatives, and unemployment is only an acceptable price for those who are not going to be made redundant. The Liberal politicians, of course, who now make this argument, have been quick to ensure that they have lined themselves up with lucrative Government jobs. We should not simply respond in the way the left has done in the past by simply opposing the Cuts, which really meant defending the Capitalist status Quo. We should respond by providing our own, truly progressive alternative, an alternative that begins by challenging the power of Capital rather than looking for easy scapegoats within the middle class, or better off sections of workers, solutions that demand that real wealth and power in the means of production are transferred into the hands of workers.