Why Balls is right to explore a wealth tax

Wealth taxes are fairer than those on income and they stimulate growth.

So far, beyond a pledge to restore the 50p tax rate, we've heard surprisingly little from Labour on the future of the tax system. But that changes with Ed Balls's interview in today's Independent. Whilst dismissing the wealth tax proposed by Nick Clegg as "not in the real world", he reveals that Labour is considering adopting a version of Vince Cable's mansion tax. "The likes of a mansion tax need to be on the table to be looked at," Balls tells the paper. He adds that he wants to begin "discussions" with the Business Secretary as soon as possible.

The person thinking seriously about this was not Nick Clegg but Vince Cable. I feel for Vince and the extent of his frustration [with the Coalition]…but if he wants to channel those frustrations into discussions about how we can achieve growth and jobs in the future I'll start discussions with him tomorrow.

Ball's announcement is an encouraging one. Here at the NS, we've long argued that the burden of taxation should be shifted from income towards wealth and assets (see NS editor Jason Cowley's 2010 cover story on the subject). Wealth taxes are harder to avoid than those on income (even the most determined tax avoider cannot move his or her mansion to Geneva), are progressive (wealth is even more unequally distributed than income), and benefit the economy by shifting investment away from unproductive assets and towards wealth-creating industries. For the psephologically minded, it's also worth noting that high-end property taxes are popular. A Sunday Times/YouGov poll found that 63 per cent of the public (including 56 per cent of Tories) support a mansion tax, with just 27 per cent opposed.

But, like Ed Miliband in his interview in this week's New Statesman, Balls is also clear that Labour cannot rely solely on the tax system to reduce inequality. The shadow chancellor joins Miliband in referencing the zeitgeisty theme of "predistribution" - the belief that state, rather than merely ameliorating inequalities through the tax and benefits system, should act to ensure they do not arise in the first place.

As I wrote in my blog on the subject last night, Balls and Miliband advance two main arguments for this shift of emphasis. Firstly, that the failure of the last Labour government to reduce inequality means that while redistribution is necessary (and will remain so) it is not sufficient, and secondly, that the fiscal constraints a Labour administration would face (based on current forecasts, it would inherit a deficit of £96.1bn or 5.8% of GDP) mean that it will be not able to increase tax credits (the last Labour government's primary redistributive instrument) in the manner that Tony Blair and Gordon Brown did.

As I note: "The great strength of predistribution is that it does not cost the state a penny to pursue. Rather than relying on taxation to narrow the gap between the rich and the poor, Labour will harness the instruments of legislation and regulation. Rail companies, for instance, would be barred from raising fares by more than 1% above inflation."

Expect to hear lots more on the subject when Balls and Miliband address today's Policy Network conference at the London Stock Exchange.

Shadow chancellor Ed Balls said "the likes of a mansion tax need to be on the table".

George Eaton is political editor of the New Statesman.

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.