Tax: the next battleground

Focusing on spending cuts distracts us from the real issue

Nice to see the Guardian's economics editor, Larry Elliott, a man who I have a lot of time and respect for, pointing out the obvious today:

"...it seems perverse that the current debate is all about which bits of spending should be cut rather than which taxes should be raised. There are plenty of ways to raise revenues. Darling could delay the introduction of the 50% tax rate but lower the threshhold; he could prevent corporate tax avoidance by taxing companies on their turnover rather than their profits; he could deter speculative holdings of property through a land value tax."

The Guardian, however, have come late to this debate. The New Statesman made a similar point in our leader a fortnight ago:

"There is no reason why Britain, a low-taxed country by European standards, cannot use taxation to help close the fiscal gap....Who, for example, would object to a tax on bank bonuses (apart from the greedy bankers themselves)? In the US, Congress passed a 90 per cent tax on bonuses paid out by the failed insurer AIG to its executives. Why not do the same here with the state-owned RBS and Lloyds? Unearned income is ripe for progressive taxation. How about cracking down on tax avoidance, too? The TUC and the Tax Justice Network argue that tightening tax loopholes and abolishing tax havens could raise roughly £25bn."

It's high time lazy journalists and commentators moved beyond the simplistic Balls-inspired Labour investment vs Tory cuts argument, as well as the Mandelson-inspired gentle Labour cuts vs evil Tory cuts argument, and instead focused on tax rises vs spending cuts and the debate over what the appropriate balance between these two fiscal options should be in the coming years.

One killer fact stands out from Elliott's piece:

"In reality, the reason the deficit has ballooned has far more to do with a collapse in tax revenues than an increase in spending. In the year to June, the government's real tax take was almost 10% lower than a year earlier, while spending has grown by little more than 1% once inflation is taken into account - a modest increase in the context of the steepest downturn since the war."

Shouldn't we be hearing more about this from Darling, Byrne, Balls et al?

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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Who is responsible for an austerity violating human rights? Look to New Labour

Labour's record had started to improve under Jeremy Corbyn and John McDonnell. 

The UN has made it clear the Government’s austerity programme breaches human rights. This is not because of spending cuts - it is because because those spending cuts target women and disadvantaged groups, particularly disabled people and asylum seekers.

The degree of injustice is staggering. The Coalition Government used a combination of tax increases and benefit cuts to reduce the net income of the poorest tenth of families by 9 per cent. The cuts faced by disabled people are even more extreme. For instance, more than half a million people have lost social care in England (a cut of over 30 per cent). Asylum seekers are now deprived of basic services.

The injustice is also extremely regional, with the deepest cuts falling on Labour heartlands. Today’s austerity comes after decades of decline and neglect by Westminster. Two places that will be most harmed by the next round of cuts are Blackpool (pictured) and Blackburn. These are also places where Labour saw its voters turn to UKIP in 2015, and where the Leave vote was strong.

Unscrupulous leaders don’t confront real problems, instead they offer people scapegoats. Today’s scapegoats are immigrants, asylum seekers, people from ethnic minorities and disabled people. It takes real courage, the kind of courage the late MP Jo Cox showed, not to appease this prejudice, but to challenge it.

The harm caused by austerity is no surprise to Labour MPs. The Centre for Welfare Reform, and many others, have been publishing reports describing the severity and unfairness of the cuts since 2010. Yet, during the Coalition Government, it felt as if Labour’s desire to appear "responsible" led  Labour to distance itself from disadvantaged groups. This austerity-lite strategy was an electoral disaster.

Even more worrying, many of the policies criticised by the UN were created by New Labour or supported by Labour in opposition. The loathed Work Capability Assessment, which is now linked to an increase in suicides, was first developed under New Labour. Only a minority of Labour MPs voted against many of the Government’s so-called "welfare reforms". 

Recently things appeared to improve. For instance, John McDonnell, always an effective ally of disabled people, had begun to take the Government to task for its attacks on the income’s of disabled people. Not only did the media get interested, but even some Tories started to rebel. This is what moral leadership looks like.

Now it looks like Labour is going to lose the plot again. Certainly, to be electable, Labour needs coherent policies, good communication and a degree of self-discipline. But more than this Labour needs to be worth voting for. Without a clear commitment to justice and the courage to speak out on behalf of those most disadvantaged, then Labour is worthless. Its support will disappear, either to the extreme Right or to parties that are prepared to defend human rights.

Dr Simon Duffy is the director of the Centre for Welfare Reform