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Mass anti-austerity protests engulf Europe

Workers of the eurozone, unite!

Countless factories, transport networks and, public services were brought to a virtual standstill on Wednesday as millions of workers turned out in protest as part of a pan-European stand against relentless austerity and soaring unemployment.

Billed as the “European Day of Action and Solidarity”, mass-walkouts swept through the continent, with more than 40 trade unions from over 23 countries taking part in the demonstrations.

In the early hours of Wednesday morning, protests gripped the Iberian Peninsula – where roughly a quarter of the workforce is unionised – as Spanish and Portuguese unions staged their first coordinated strike in history.

Across Portugal – where parliament is expected to increase average income tax by as much as 30 per cent in its upcoming budget –  schools were closed, public services disrupted, and public transport ground to a halt as mass protests flared.

Spanish unions followed suit, holding a 24-hour strike against the government’s failure to tackle the country’s woeful unemployment rate, which at 25 per cent is Europe’s highest.

600 flights have already been cancelled from Spanish airports as transport workers joined their Iberian counterparts in paralysing rail, road, and airport links. In Madrid, flashes of street violence saw over 80 arrested by midday. Shortly after, a phalanx of riot vans lined up in the capital as police reportedly fired rubber bullets into crowds of demonstrators.

Mass strikes raged in Italy, where its biggest union – CGIL – organised a series of rolling four-hour strikes across Rome, Milan, Turin, Florence and dozens of other towns and cities.

In Rome, workers were joined by students who attempted to march on the residence of prime minister Mario Monti in protest against planned cutbacks in the schooling sector, pelting riot police with rocks as they clambered for a way through.

In the most violent of the day’s protests, running street battles in Turin between activists and riot police saw 6 officers hospitalised.

The clashes followed a tense Tuesday in Sardinia, with industry minister Corrado Passera and minister for territorial cohesion Fabrizio Barca requiring helicopter evacuation after demonstrators blocked roads surrounding their offices with burning vehicles.

Unsurprisingly, Greek demonstrators flocked to the street as workers staged their third major walkout of the month in the wake of last week’s violence in Athens.  Protesters rallied in plazas across the capital to protest perennial unemployment and fresh austerity measures pushed through parliament last week.

In an increasingly precarious environment for the Greek government, one protester told The Guardian’s Helena Smith that the situation could plunge the stricken nation into revolution:

“There will be a revolt because we will have absolutely nothing to lose”, he warned.

The contagion of protest even spread to the eurozone’s stronger economies, with trade unions planning 130 marches in France and workers disrupting transport links in Belgium.

Even in Germany – the eurozone’s economic engine – pockets of union-led demonstrations cropped up across the country in a sign of solidarity towards the unified stand against austerity.

According to the European Trade Union Confederation (ETUC), the organisation behind the strikes,  the sheer scope of the protests reflects the catastrophic failings of austerity, which has served only to deepen inequality whilst stifling the growth so desperately required to keep the eurozone afloat.

In a statement, the ETUC declared:

The ETUC strongly opposes the austerity measures which are plunging Europe into economic stagnation, recession, and dismantling the European social model.

These measures, far from restoring confidence, are only aggravating imbalances and creating injustices.

Unemployment rates have hit record highs across Europe as of late, with the eurozone’s average rate currently standing at 11.6 per cent. In both Spain and Greece more than half of 18 to 24-year-olds are unable to find work.  

Growth indicators aren’t much better: Portugal’s economy is expected to contract by 3 per cent this year, whilst third quarter Greek GDP figures have plunged to -7.5 per cent.

More profoundly, Wednesday’s protests illustrate how the strict adherence to staunch fiscal parameters outlined by the troika – the International Monetary Fund, the European Central Bank and the European Commission – has driven a wedge between establishment and society.

The unsavoury combination of higher taxes, plummeting welfare spending and crippling unemployment has fuelled charges against states of relinquishing economic sovereignty to outside financial bodies, who protesters accuse of dragging millions into poverty through their fervent pursuit of budgetary discipline.

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.