8.3.11

IDEAS FROM GEORGE MONBIOT'S BLOG ON RESISTANCE TO THE COALITION


So here goes. We need to redress the balance between cuts and tax rises (currently 3:1)(3), as fairly as possible. That means starting with the UK’s most regressive form of taxation: national insurance. This levy is so unfair that it’s hard to understand why it hasn’t received more attention. On earnings of up to £844 a week, you currently pay 11% national insurance. On earnings beyond that point, you pay 1%(4). We should raise the national insurance rate for higher earnings from 1% to 15%(5). This would help to address a wider injustice: the poorest 10% of UK households pay proportionately more tax (direct and indirect) than the richest 10%(6).
We must close the tax gap. Tax avoidance and evasion are the preserve of the very rich: only millionaires and corporations can afford the specialist advice required to disguise their earnings. The tax gap amounts to between £40bn and £120bn a year(7,8). Not all this money can be reclaimed. We need a national target to claw back £25bn a year. Staffing levels at HM Revenue and Customs should be raised accordingly.
Of the various means of reclaiming money from the banks, a financial transactions tax (the Robin Hood tax) is the fairest and most sustainable. It’s easy to collect, hard to avoid and highly progressive, as it falls largely upon the richest people in the country(9). A tax of 0.005% on financial transactions could raise a net £13bn a year; a tax of 0.01%, £25bn(10).
The government should adopt the plan proposed by the Green Fiscal Commission: by 2020 levies on damage to the environment should amount to 20% of the total tax-take(11), with a commensurate reduction in the income tax and national insurance paid by people with low earnings. The tax exemption for private schools must end. This costs us £100m a year – to grant unfair advantages to the children of the rich(12).
Greg Philo of Glasgow University has proposed an interesting means of mobilising the money the very rich have stashed away: transferring the entire national debt to them. He’s shown that this could be done through a one-off tax averaging 20% on total assets worth more than £1m(13). It would be graduated, so that the richest people are charged at a higher rate than mere seven-figure millionaires. It wouldn’t have to be paid immediately: the asset-holders could choose to pay only the interest on the debt until they died, whereupon the capital would go to the state. This ensures, as the government has promised, that “the broadest shoulders should carry the greatest burden.”(14)
The government should set a target of 0.5% per year for reducing the Gini coefficient – the measure of income inequality – in the United Kingdom(15). To this end it should raise the minimum wage by inflation plus 5% each year until it reaches the level identified by the Living Wage campaign(16). We also need an official High Pay Commission, whose purpose is to identify, as a multiple of the living wage, the maximum remuneration anyone in the UK should receive(17).
The following new military hardware programmes should be scrapped: the Trident weapons system; aircraft carriers; Eurofighter jets. The Barrow shipyard, where new nuclear submarines were to be built, should be redeployed to produce offshore renewables: wind, wave and tide turbines(18). The money saved should be spent on a new public housing programme.
To fill looming gaps in provision and reduce unemployment, the government should raise the public workforce by the following levels: 10,000 more social workers; 10,000 more planners; 50,000 more hospital cleaners; 100,000 more educational staff; 350,000 extra care workers for the elderly(19). As Unison points out, 92% of the cost of employing a public service worker is recouped by the state, because it raises tax revenues while reducing benefit payments(20).
These measures will help to address the immediate problems of the deficit, the debt, unemployment, inequality and a threatened double-dip recession. But we also need to move to a system which doesn’t depend on endless economic growth to sustain high employment and a decent standard of living. We need a Steady State Commission, to develop a government programme for turning a growth-based, boom and bust economy into a stable system, without damaging the prospects of the poor(21).

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