Taxing our patience

THE FIRST week of election campaigning has been dominated by arguments over public spending. Hague’s arguments about “tax cuts being an idea whose time has come” – hoping to emulate George W Bush – will jar with millions of working-class people who experience daily how seriously underfunded essential public services such as health and education are.

Indeed, the Tories’ hidden agenda to make such deep cuts to allow for £20 billion tax cuts within four years will cause many public-sector workers nightmares. Hague’s planned cuts would slash health spending by a third for example.

Blair called Hague’s deluded economics Hagueonomics. Yet, the proposals of either party could be called Vagueonomics.

In all advanced capitalist countries the debate about what level of public spending can be sustained has been ongoing. In Italy, the issue of whether or not the state can continue to provide current pension levels dominated the recent general election.

In order to maintain their neo-liberal, pro-capitalist policies both Labour and Tories are not prepared to increase public spending. Both parties want to reduce the tax burden on big business and the wealthy while providing less services through the state. That’s why the Institute for Fiscal Studies warns Labour’s financial plans will hit a ‘Black Hole’ in 2003-2004; then they will have to decide whether to increase taxes further or make big cuts in government spending.

The Tory argument of ‘you paid the money where are the services?’ is already striking a chord amongst many. But, their alternative slogan for this election should really warn that under Hague, as under Bush, you may get tax cuts if you are wealthy enough but there won’t be any services.


The tax and public spending plans of both parties are seriously flawed because they try to give the impression that they can provide decent public services without spending more. That’s why both Labour and Tories hope to pass off the responsibility through greater privatisation of public services.

Labour has only managed to meet its NHS waiting list targets by paying the private sector to perform 25,000 operations in three months. Over £1 billion per year is spent in hiring agency staff – about half of which goes straight to the agencies – because of acute staffing shortages in the NHS.

The experience of where services have been privatised shows that corners are cut to make more profits and the quality of service deteriorates.

Labour has dismally failed to improve public services. That’s because they have continued the Thatcherite cuts policies developed in the previous 18 years of Tory government.

This culture has bitten so deep that senior civil servants say their departments are undercutting government spending allowances because they got out of the habit of spending.

A report on Labour’s provision of public services that was due to be published recently was suppressed by government spin doctors because it was so damning. Leaked documents obtained by the Observer say that Blair personally intervened to shelve the report.

Wealth tax

He wanted to suppress before the election this report that shows “Britain’s schools, hospitals, criminal justice system and core services lacked ‘sufficient, sustained investment’, suffered from staff shortages, low pay and poor leadership and let down their users.”

Public spending in Britain at 39% of economic output is low compared to other European countries, which spend nearly 10% more of output. Yet, British workers are taxed just as heavily through indirect ‘stealth’ taxes as their European counterparts but suffer far worse services.

This is because £80 billion worth of tax cuts made during Thatcher and Major’s reign were mainly used to redistribute lots of cash to the wealthy.

These obscene handouts should be taken back through a wealth tax.

Combine that with taking the major companies that dominate the British economy into public ownership under working-class control and management, then there could be massive investment in public services of hundreds of billions of pounds and money to spare for tax cuts for working-class people.