Yet another device to make workers pay for the crisis - but we can refuse!

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Workers' Fight workplace bulletin editorials
27 April 2009

Darling caused some uproar when he said that people earning £150,000 a year would have their tax increased from 40% to 50% - from 2010-2011. And that personal allowance will be withdrawn from those earning above £100,000 - also from 2011.

Actually he must have been pleased at the noise. Because he surely would like us all to believe he is actually doing something to take from the rich and give to the poor, at a time like this, when that is precisely what he is not doing!

It is worth remembering amid this outcry about a 50% tax rate, that there was an upper rate of tax of 60% right up until 1988 - under Margaret Thatcher herself - and that it was 83% from 1974 - 1980!

So today's rate is not even nearly comparable to the last serious recession in the 1970s, and not only that, the tax regime since Labour arrived in power is one of the lowest there has ever been with the very lowest tax for company profit (22-28%)!

The rich jump though loopholes

In fact there will be very little yield from this supposed "tax on the wealthy" anyway, since a large part of their riches do not even get classified as "income", like for instance, their assets! And their capital gains are still only taxed at 20%! Not to mention the fact that for earnings above £884/week they do not even have to pay any National Insurance contributions! You would think that at the very least, they'd be asked to give more towards NI!

Anyway, how many people earn over £150,000 a year? The Treasury says it's 350,000. This will only raise a small amount of revenue. But even that small amount is unlikely to be forthcoming in full, as these rich people can easily reduce their "taxable income" if they turn themselves into a company, convert their income into capital gains, retire early, or invest in a tax avoidance lawyer!

Indeed, unlike the rest of us whose tax is taken directly out of our pay packets, these rich people can hide their wealth and jump through hundreds of loopholes to avoid paying a penny. In 2007, the TUC worked out that just by using legal tricks, the rich avoided paying £13 billion in taxes!

Yet this is only the tip of the iceberg. This survey also showed that the very wealthy, whose assets totalled £127 billion only paid £14.7 million in tax! That is a tax rate of 0.1% of their assets! And we do not even know what their incomes were!

According to the Sunday Times Rich List 2009,

the richest 1,000 people in the land (collective wealth £258.27 billion), were shedding real tears over their sad fate as a result of the credit crunch - which has seen them lose some of their money.

The newspaper calls them "recession-battered" (!) and explains that their wealth has gone down by one third. So Lakshmi Mittal, the steel tycoon, now only has £10.8 billion, Roman Abramovich only has £7 billion and Richard Branson has fallen from £1.5 to £1.2bn... Of course, these assets cannot be touched by a 50% income tax rate. And even if they could, these individuals would still be filthy rich. But what if the government did decide to tax their wealth - it would then have no excuse for allowing the number of children living in poverty to remain in the millions, just because it can only "find" £140m, for them, instead of the £2.4bn required. Would Mittal or Abramovich actually miss a few billion if it was taken from them by the taxman?

Bogus tax on rich, while workers pay

And yet it is that bogus 50% rate (and a cut on their pension tax relief) which is the sum total of what Brown's Darling intends to do to "make the rich pay" - in the next tax year. Of course, taxes which effect the rest of us, like tobacco and alcohol, increase immediately and the fuel increase comes in September! Moreover, public expenditure cuts are quite openly announced which will lead to serious service cuts and tens of thousands of job cuts.

Darling said he wants the Civil Service to find £45 billion in "efficiency savings" by 2013-4. The NHS is meant to cut spending by £2.3bn by 2011, Education must cut its budget by £1bn and local councils by £600m.

How many thousands of lost jobs will that mean? What will happen to those already "rationed" by the NHS treatment lottery? How many schools will now not be rebuilt? And as for the dire state of public housing - a result of the cuts, the number of homes built will slump to an 88-year low of 70,000 this financial year, with those waiting on the housing list soaring to "unparalleled levels" according to the Housing Federation.

This is what Brown called a budget which "grows" the economy rather than cutting it!!

In fact these measures all disguise the governments main aim - to get workers to pay for the crisis. If we don't want to do so, we will have to fight the bosses and their government. There is nothing else for it!