A blog for the socially and politically conscious, written by a young, gay activist who strongly believes in equality and justice.

Wednesday, 24 March 2010

Tax justice? A fat chance

It's Budget day on Wednesday and, as always, everybody's telling Chancellor Darling what to do. And so they should, because the man doesn't seem to have any real grasp of what's necessary. He has, at least, realised that it's necessary not to hack back at the public sector immediately for fear of provoking the dreaded "double-dip" recession. Or, at least, that's the public stance he is taking against the Tories. However, in contrast to what he's saying in public, there seems to be no let-up in the continuing campaign of butchery of the sector that Labour has been carrying out for several years. The CBI got its whinge in early this year, probably because it doesn't, for once, agree totally with the Tories and doesn't want to embarrass them. It doesn't quite accept the Tories' "cut fast and cut deep" philosophy, although it still wants to destroy the public sector as soon as possible. But it just had to repeat its ritualistic position that it would oppose "resorting to damaging tax rises at a time when the economy is still fragile." However, its companion body, the Institute of Directors, stuck to hacking back at public expenditure - an odd choice when you consider that many of their members make a living supplying the public sector.

It's worthy of note, though, that the CBI is maundering on about tax rises being dangerous. If there's one thing notable about that organisation, it's the acumen of its present director general Richard Lambert. He's nobody's fool and, as ex-editor of the Financial Times, you wouldn't expect him to be. He has noticed something that is glaringly obvious to everyone except election-obsessed Westminster politicians and that is that taxation is the obvious answer to the problems which have beset the economy since the bankers damn nearly demolished it. Let Tories flinch and Labour sneer, taxation is the answer here. First, a tax on banking profits. If we are ever to reclaim the costs of the rescue mission that Mr Darling mounted, what better way than to tax the excess profits which have been a by-product of that rescue? Second, there's the so-called Tobin tax. Originally conceived as a tax on excursions into foreign currency speculation, its latest incarnation is as a transaction tax on all City dealings, whether in shares, equities or currencies. As well as raising billions, such a tax would act as a brake on the City speculations and manipulations that contributed so much to the banking crisis. And it certainly doesn't need to be restricted to the weedy little version at present being proposed in various quarters.

When billions are being generated by dodgy share manipulations, why not a full-blooded tax that gives traders second thoughts about the fast buck and raises capital from those who still go for it? Which brings us onto the whole subject of a progressive and redistributive taxation policy generally. We have at the moment almost the flattest taxation curve that can be imagined, with just a 50p in the pound ceiling. This hugely favours the rich over the poor. The Child Poverty Action Group is urging a "fairness test" to proof tax rises or spending cuts against any increase in inequality of incomes, assets or services. It's a decent idea, but probably a difficult one to implement without a massive administrative machine. Let's be clear. The function of a proper progressive taxation policy is to guard against any increase in inequality of incomes or assets. Such a policy is inescapable where social justice is the aim and a reduction in the present gulf between rich and poor the object. The guilty silence of the parties on such a policy is just more proof that it would be effective in narrowing the gap they seem to defend at all costs. All it takes is the courage to do it, but that courage may well be seen to be lacking in Mr Darling on Wednesday.

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