Can a wealth tax bridge the gap?


Can a wealth tax bridge the gap?

BARCLAYS BANK boss Matthew Barrett could get a £30 million bonus on top of his annual salary of nearly £1 million as his reward for closing branches and sacking workers. This makes people burn with anger at the injustice of Britain’s growing wealth divide.
As the article below shows, this growing inequality has been fuelled by massive tax handouts and subsidies to the rich. Meanwhile most people in Britain are paying a greater share of their income in direct and indirect tax – the so-called ‘tax burden’.
Embarrassed by pre-budget revelations about working people’s increased ‘burdens’ under Labour, the government then argued that they were carrying out wealth redistribution (ie the rich are being taxed more) by stealth.
Yet working-class people know they now pay more taxes for less services from national and local government. The wealthiest are getting away with paying historically low levels of tax, while at the same time raking in massive share dividends and profits.

A NUMBER of groups on the Left call for increased taxation of the wealthy in order to redistribute wealth to the poorer sections of society and provide greater funding for public services.

The Scottish Socialist Party (SSP), for instance, is campaigning for the introduction of a Scottish Service Tax (SST) to replace the current council tax. The tax aims to make the rich pay more for local services and is based on people’s ability to pay.

Anyone earning over £10,000 would pay the SST like they currently pay income tax – as a set percentage of income. In effect it’s a progressive income tax. The SSP argue that the extra funding could provide better services and economic investment to help the poorest in society.

For instance Brian Souter, the multimillionaire head of Stagecoach, who has used his massive wealth to fund a bigots’ campaign against repealing Section 28 in Scotland, would go from paying £1,516 at present to over £80,000. The academics who worked with the SSP in producing the proposals estimate that the SST would generate £100 million extra for Scottish government and councils.

Predictably the wealthiest in Scotland have talked of moving south of the border if the Scottish Service Tax became a reality. The Scottish media described the planned tax as “Tommy’s plan to tax the rich until the pips squeak”, referring to Tommy Sheridan, the SSP member of the Scottish Parliament.

All socialists would welcome a new tax that hits the rich where it hurts most – in their wallets. But while the Scottish media scream about the rich’s pips squeaking, the Scottish Service Tax is in effect a mildly redistributive reformist measure rather than a thoroughgoing socialist redistribution of wealth.

The Scottish Service Tax is limited in how far it can reverse the massive shifts in wealth of the Tory and New Labour years. Additionally large amounts of what is known as the Social Wage, ie what working-class people gained in the post-war years through the introduction of the NHS, free education and universal benefits, have been massively eroded by the Thatcherite policies of the Tories and Blair’s New Labour.

The Socialist Party agrees that rather than increasing the tax burden on working-class and middle-class people to pay for improved services, the super-rich should be much more heavily taxed. This can be done in the form of increased direct taxes by progressive taxation and a wealth tax.

But we also believe that these measures are not enough on their own lift millions out of poverty and provide long-term increased funding for public services. To achieve that a socialist plan of economic production would be needed.

This would take big business out of private hands and into public ownership through democratic working-class control and management

The massive wealth that big business accumulates could then fund a greatly increased minimum wage, reduce the taxes paid by working-class and middle-class people and adequately resource public services like health and education.

It could also fund a massive programme of public investment to provide jobs, housing and decent living conditions for the majority of people in Britain.