Burma - free and socialist

<strong>Taken from The <em>New Statesman</em> 28 February 1948</strong>

The bloody repression of the Burmese people by the ruling military junta is only the latest tragedy to befall them since they gained independence from the British in January 1948. However, in the early years of freedom, there was widespread optimism that Burma would prosper and become a socialist model for the rest of south-east Asia. This positive mood was reflected in Dorothy Woodman's despatch from Rangoon.

Selected by Robert Taylor

Proud are the people who first secured a one-rupee note of the Government of Burma. Previously all banknotes were those of the Government of India, surcharged “negotiable only in Burma.” The peacock on one side and a beautifully designed Burmese boat on the other now take the place of the King’s head. I watched the opening ceremony of the Union Bank of Burma. The directors took the oath of fidelity and secrecy, just as the President, the Prime Minister, Members of Parliament, and judges took a month ago, in ceremonies dignified and impressive in themselves and symbolic of Burma’s freedom. Political independence has been won; economic independence involves intricate and unprecedented problems. But the essential point is that the Government is determined to move to a Socialist economy, and a State-owned central bank is part of the process. The budget position is strong; and, with bumper harvests and the general settling down of the people, the Government can afford to be optimistic.

During these first months of Burma’s independence I have travelled round the countryside. Everywhere there are signs of a constructive nationalism, a new pride and self-reliance, the release of creative energies devoted to the building of the new Burma. The Socialist Government of Burma is showing great wisdom in tackling the fundamental problems first - particularly the basic issues of land reform and the control of the country’s large resources. About 70 per cent of the people earn their living solely by cultivation and, in 1940, two-thirds of the tilled acreage were paddy (rice) fields. At that time 50 per cent of the land was owned by absentee landlords, of whom half were Chettyars (Indian moneylenders). The rest of the land was in the name of cultivators who were predominantly Burmese. Many of them were in debt to Chettyars; in fact, at the time of the Japanese occupation, Burmese cultivators in Lower Burma owed at least 500 million rupees. Since the end of the war many of them have taken matters in their own hands and have refused to pay any rent or any taxes or interest on their debts. The Government has now declared that, in general, neither capital nor interest need be paid till 1951-2. This five-year moratorium will help the Burmese cultivators by regularising the position, and in five years’ time the problem of debts should be solved.

The complexities of land nationalisation apply particularly to Lower Burma. In Upper Burma, where crops are more varied - sesame, beans, cotton and millet - the land is already divided into smaller holdings. Most of the landowners are cultivators and smallholdings have remained in the same family for generations. Tenancies are variants of arrangement between landlord and tenant as to the distribution of cultivation expenses, labour and produce. The legislation announced by the Ministry of Agriculture therefore mainly applies to Lower Burma. The Government has taken power to allocate to cultivators all land now worked by tenants and all land now worked by owner-cultivators in excess of 50 acres per household. Land belonging to religious orders and land already controlled by the Government are excluded.

There may be opposition to this legislation, and there have been rumours in Rangoon that disgruntled landlords might give Ba Maw support if he revives his party. But his potential following is small, whilst the well-organised Peasants’ Union is solidly behind the Government. The Union is already busy on schemes of educational work among the peasants; their slogan is not only “land for the peasant,” but better crops, more animals and improved marketing.

The Ministry of Agriculture has also tackled the thorny problem of the teak forests. Teak is the third in importance of Burma’s exports, and about 100 million rupees have been invested in the industry, mainly by British firms. Most of the forests are worked on the lease system, and many of the leases are long-term. The Government has informed the timber companies operating in Central Burma that, in accordance with the Constitution, it has decided to nationalise teak extraction. From June 1, 1948, it will extract through its own agency approximately one-third of the teak in the reserved forests of the Burma Union. The more accessible areas in Central Burma are being taken over first, and the lessees are invited to discuss the details of the impending transfer, including staffs and capital assets.

The question of oil production is still under discussion. In 1941 about 75 per cent of oil production and 85 per cent of refining was in the hands of one company - the Burma Oil Company; the only other important enterprise was the Indo-Burma Petroleum Company, connected with Steel Brothers, the chief British trading firm in Burma. Apart from the problem of foreign control, there is the difficulty caused by the demolition of Burma’s oil wells in the spring of 1942. I travelled through miles and miles of derelict oil wells - “British pagodas,” a Burmese friend called them. Re-drilling and re-conditioning have only just started in the Chauk district. So far, the Government has made no statement. But there is no question of confiscation; and, given a reasonable attitude on the part of the oil firms, the Burmese Government hopes for friendly co-operation with the ultimate object of nationalisation envisaged in the Constitution.

Such is the picture since the hoisting of the Burmese flag. The Government has an impressive record. Every day there are new signs of it in many directions. There is the Salaries Act, for instance, which makes it compulsory for Ministers to give up their business interests - a wise precaution which convinced people of the Cabinet’s personal integrity. Then there was the opening of the Translation Society, when Thakin Nu, the Prime Minister, said that Burmans must seek “the four strengths “ - physical strength, the strength of knowledge, the strength of wealth, and the strength of moral conduct. The Society will prepare translations of literary and scientific works, and sell them cheaply to the large network of libraries which the Government intends to build all over the country. Another scheme which is under discussion is a National Theatre in Rangoon, which must be one of the few capital cities in the world without a theatre or museum. And so it goes on. Burma was semi-colonial country, but now has a Constitution into which Socialism is written. Her success can make a very important contribution to the future of Socialism in South-East Asia.

This article first appeared in the 08 October 2007 issue of the New Statesman, Election fever

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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.