As Tories bicker over a flat tax, here’s why it doesn’t work…

Tory policy chief Oliver Letwin is calling for a ‘flat tax’ rate, according to a Mirror exclusive yesterday.

He was talking in private to a laissez faire think tank, Politeia, and although instantly rebutted by Conservative Party HQ, it has sparked debate about Tory plans to cut tax for the rich, with Ed Balls today arguing the party is ‘champing at the bit’ to slash the top rate to 40%.

But that itself marks a step towards a flat tax, a policy both George Osborne and David Cameron have praised in the past. Left Foot Forward covered the topic last year amid a renewal of right-wing interest in the policy. What is it though?

The policy entails everyone paying the same basic rate – usually touted as around 20 or 30%. But it has two major possible implications.

If it was set at a low rate, it would require enormous further cuts to public services to compensate for tax income plummeting overnight. But if it was set at a high rate, it would require enormous tax rises among the poor to fund an effective tax cut for the rich, i.e. from the 45% top rate down to the 31% that the Institute for Fiscal Studies says would be necessary to maintain current Treasury tax receipts.

So we have two options with the flat tax – Cameron’s ‘permanent austerity’ hailed by neoliberals (an outcome which would hit the poorest hardest), or significant tax rises for low earners, which would also hit the poorest hardest. The flat tax is therefore, as is commonly understood, deeply regressive. Doesn’t take a genius to work it out.

But it’s also verified by several studies. Here’s an analysis of US flat tax plans by income bracket:

Flat tax

Citizens for Tax Justice, based in the US where calls for a flat tax rate are frequent, have therefore determined that the shift would result in ‘enormous tax cuts for the richest five percent of taxpayers’ alongside ‘tax hikes for all other income groups’, while leaving the investment income of the wealthy essentially untaxed.

Moreover, there’s little evidence to suggest it would ‘work’ in the way right-wing advocates say it would. It has only been introduced in some Baltic states and Russia. In the latter, it was hailed as dramatically boosting actual payment of tax, where previously it had been avoided. But according to a London School of Economics report, this coincided with a dramatic boost in tax collecting powers, and sweeping changes to other forms of taxation, a finding confirmed by another 2007 study.

Meanwhile, another key argument for the Flat Tax, ‘simplicity’, has been fundamentally rebutted by a University of Chicago study, which showed that in any complex economy there is no such thing as a ‘simple’ tax system, particularly when companies and individuals can avoid tax at whatever level it is set. The implementation costs for shifting to such a system were also significant.

Even a study by the free market IMF stressed ‘empirical evidence on [flat taxes’] effects is very limited’ although they did find that ‘there is no sign of Laffer [curve]-type behavioural responses generating revenue increases from the tax cut’ – in non-academic terms, cutting tax didn’t stop avoidance or boost productivity and government income.

So with the evidence unclear, or if anything pointing against a flat tax rate, the Tories have a choice to make. They could adopt a policy so right-wing even UKIP have abandoned it, in what would entrench their perception as the party of the rich forever…or they could ‘do the right thing’ for ‘hardworking people’ and drop the ludicrous plans.

Have the Mail and Express just started backing Occupy?

A strange thing happened last week. The Daily Mail ran a headline: ‘He shall not be moved!’ The issue? 200 people answered a call from a cancer sufferer to stop bailiffs evicting him.

The story was extremely positive, hailing ‘people power’ as ‘supporters stage a peaceful protest’.

Daily Mail

And it wasn’t just the Mail. The Express ran the story too, with the headline: ‘Saved from eviction by army of 200 strangers’, backed up by the caption ‘The comfort of strangers…around 200 turned up to stop bailiffs evicting Tom and Susan Crawford from their Notts home on Wednesday.’

Daily Express

So, the question is, have the right-wing press just started backing Occupy-style tactics?

Now, a couple of points. The victim of the bailiffs was a cancer sufferer, so there is a definite human-interest element to this. Secondly, it came from a YouTube request for help – and viral posts often make headlines. But there are a couple of other questions to ask: would these papers have covered the story so positively (or at all) if the resident had been a council house victim of the bedroom tax?

And, a more controversial question: if the family had not been elderly and white, but young and from ethnic minority backgrounds – or even, heaven forbid, unemployed after being made redundant – how would the papers have covered the story? Would they have covered it at all?

There’s precedent to this tactic, after all. Occupy-coordinated actions against evictions happened a lot at the movement’s peak, particularly in the US but also in the UK – and I’m pretty sure they didn’t get (glowing) coverage in these two right-wing papers. Perhaps it’s because those were victims of austerity, rather than the error of a nationalised bank – then Bradford and Bingley.

That’s not to say it’s a bad thing. It simply points to an inconsistency. The Express have been running a campaign all week (well, all their existence) against immigrants in social housing, while the Daily Mail is typically no friend of the dispossessed. Remember the Daily Mail during the Dale Farm traveller eviction case? They owned the land, but were forced out to cheers from the reactionary press. Or when 50 people were evicted from an unused UBS office block?

So have we witnessed the start of a new sympathy for those at the hard end of the housing crisis?

My guess is no. But I hope I’m wrong.

Poll: public want fewer journos and more factory workers in Parliament

A recent YouGov poll shows that voters overwhelmingly want people from ordinary backgrounds elected to parliament – and far fewer journalists and lawyers.

57% of the public want more factory workers elected to Parliament, joint second with scientists, while 61% want more doctors as MPs.

Reporters and lawyers top the poll for the least popular MP backgrounds, with 48% wanting fewer journalists and 46% fewer lawyers in the House of Commons.

Poll results

Since 1979, the percentage of MPs who had occupations as manual workers has decreased from 16% 35 years ago to just 4% today. Meanwhile the proportion of MPs from political backgrounds has surged from just over 3% in 1979 to nearly 15% today, while the number of white collar workers and solicitors has also increased.

backgrounds of MPs by occupation

Perhaps surprisingly, over a quarter of the public want to fewer military officers and social workers elected, while 54% want more economists elected – a potential source disappointment for Modern History graduate George Osborne.

Dividing the results by party background leads to some interesting results. UKIP voters want more factory workers in Parliament, with 62% ranking it the highest priority, while Conservatives overwhelmingly want more doctors (64%) and economists (65%).

Perhaps less surprisingly, Labour supporters primarily want more factory workers in Parliament (72%) as well as GPs (71%), whereas Lib Dems would back more teachers in the Commons (62%) and scientists (63%).

YouGov say the poll reflects the most trusted professions, with journalists ranking among the least popular.

Analysing the poll, YouGov’s William Jordan said: “It’s possible some voters are aware of, and worried about, the recent decline in the number of manual workers in Parliament, and the consistently tiny proportion of MPs that were once doctors or scientists.”

Unfortunately the survey didn’t ask about one profession – bankers. You can probably guess what the result would be (i.e. bad news for former stockbroker Nigel Farage…).

Public services under attack – international austerity and the fight-back

Speaking to the Global Labour Institute’s 2014 International Summer School, Rosa Pavanelli, General Secretary of Public Services International, gave an account of the struggles public service workers are facing. This article draws on her speech to delegates in Tuesday’s opening plenary.

[Republished from my article at Socialist Unity]

Public service jobs used to be considered the gold standard in much of the world. Well paid, good pension, decent holidays and solid trade union rights. In an era of neoliberalism however, these previously ‘most formal of formal workers’ are facing the kinds of attacks previously only associated with the most ruthless companies.

International Struggles

There’s an ideological background to this. Labour market and union ‘reform’ has been factor in almost all post-crash countries. In South Korea, the government has recently initiated the most violent attack on public services – derecognising unions in each sector. Privatisation of the rail industry and the mass firing of union activists have turned the country into what one delegate called ‘a war zone’ for workers.

Public Services International, the Global Union Federation for public service workers, is used to privatisation battles – organising in industries which are often publicly funded and subsidised, but increasingly privately owned.

In the US, the Supreme Court last week ruled that there’s no obligation for care workers to pay union dues to unions collectively bargaining for them. These workers often work alone. They are now even more isolated – especially if their unions become toothless in the face of the court decision.

And internationally, at the last ILO conference, for first time delegates couldn’t reach a conclusion on the centrality of the right to strike – despite convention 87 of the ILO convention deeming it fundamental – because employers were so strongly against. It’s a frightening turn for workers of all sectors, as that is one of the only legal bases unions have on the global scale.

But there is some good news. The UN Women’s organisation recently recognised the role of unions as key to addressing the problems of women.

Moreover, until recently trade unions were previously not allowed to participate in UN discussions on migration. Now, after years of struggling from PSI and others, they can. With migration becoming a vehicle for new kinds of slavery, it’s an important milestone.

For public service workers, the water campaigns in the UN are equally important. In 2010, water was deemed a human right, providing the legal background for the massive 2013 struggles in Europe for water to be publicly owned – many of which won, in Paris and elsewhere.

And in the IMF, Christine Lagarde has recently said austerity is creating more injustice and poses a threat to democracy.

A turning point?

The ruling class, then, is getting scared. We are at critical point of class conflict. In response to a global ruling class, unions must likewise organise internationally, not just in one workplace. The welfare state wasn’t won in one shop floor but by the entire working class.

Multinational capital has a strategy. Unions can’t afford to navel-gaze. Whether in care homes, railway stations or outsourced water plants, public service workers in today’s climate of privatisation, cuts and union-busting know this better than ever.

Josiah Mortimer is reporting on the Global Labour Institute’s third International Summer School for trade unionists at Northern College this week. You can follow all of the conference online on the GLI site, through Union Solidarity International, and on Twitter, using the hashtag #ISS14. This article draws on the plenary ‘The Fall & Rise of Labour?’

How do we revive the global union movement?

The global labour movement is at a crossroads.

That’s the verdict of Bill Fletcher of the American Federation of Government Employees, speaking to the Global Labour Institute’s International Summer School in Barnsley this week. Workers are being hit by neoliberalism across the world – that much is obvious – but politically, the issue is this: how are unions to respond in the face of supposedly left-wing parties that have conceded to many of the neoliberal policies unions despise?

It’s question being asked while the populist right soar in much of the global north – filling the void where previously socialist politics would have existed.

Fletcher sees the current attacks on workers – from privatisation to public sector cuts – as representing the ‘obliteration of the social contract’ that emerged following the Second World War. But it was a social contract that was also ‘historically specific’ – built amid fear of the red threat.

It’s a message echoed by Asbjørn Wahl of the Norwegian Union of Municipal and General Employees. For him, the tripartite state-union-employer relationship dominant across much of Europe following World War Two was the ‘child of class compromise’ – a child that’s now left home. In other words, there’s no going back. But neither should we. Capitalist and union cooperation dampened the radicalism of working class in an attempt to bolster support for the Cold War.

While it did lead to several decades of social progress in the West, social democracy became a mere ‘mediator between classes’. Such mediation became the final aim of the labour movement. And in capitulating to this, they gave up on socialism, contributing to an ideological crisis on the left.

Yet the end of the social democratic accord in the 1980s has made nation states less and less responsive to popular demands, while the stresses of neoliberal globalisation turn populations against one another. For Fletcher, the system’s weakness has created a breeding ground for a right-wing populism – what he amusingly calls ‘the herpes of capitalism’ – that is now on the rise across Europe and elsewhere. At the same time, any resistance to the neoliberal project is met with repression.

There is clearly a strong sense of alienation among people however. It’s up to the left to politicise this discontent. To do this will require broad new social alliances, concrete alternatives, and unions taking on broader political responsibility amidst mainstream party capitulation, Wahl claims. Such alternatives must be built on a minimum programme that includes standing against austerity, taxing the rich, cancelling public debt, socialising finance and defending democracy.

The current crisis is of course political. The response must also be political – rebuilding labour movement and rebuilding left must go hand in hand. There’s no going back to the corporatism of the 1970s. But Fletcher argues unions can be a ‘civilising force amid the current chaos’ – if they go through a reformation.

Such a reformation must involve the re-radicalisation and re-politicisation of unions instead of continuing a business or servicing model. And that’s no small task. But if the labour movement is to get out of this current conjuncture, we can’t depend on doing the same and expecting different results. Nor can we rely on revivalism and nostalgia for some by-gone social democratic past. Instead, we need a fresh start if we’re going to have any chance of challenging the ‘capitalism on crack’ that is the current paradigm. That will include working with social movements like those that organised the millions-strong Madrid march against austerity in March. If we do this, Wahl says, ‘we have a chance to avoid extinction’. It is, therefore, a chance we can’t afford to miss.

Josiah Mortimer is reporting on the Global Labour Institute’s third International Summer School for trade unionists at Northern College this week. You can follow all of the conference online on the GLI site, through Union Solidarity International, and on Twitter: #ISS14. This article draws on the plenary ‘Capitalism, Anti-Capitalism and the Trade Union Movement’.

Natalie Bennett to restand uncontested for Green Party leader

The Green Party have just published the full list of nominations for the upcoming Green Party Executive (GPEX) elections. Natalie Bennett will be restanding uncontested, while current Deputy Leader Will Duckworth is also restanding – but this time under a new system of two co-deputies in a hotly contested race (including two Young Greens – Amelia Womack and Rob Telford).

Just three of the eleven (twelve with the two co-deputy leaders) positions are contested. Howard Thorp stays in the job as Campaigns Coordinator while Sue and Richard Mallender both keep their posts. Meanwhile Green Left activist Derek Wall faces a challenge in the International post. The fairly new post of Trade Union Liaison Officer retains People’s Assembly co-chair Romayne Phoenix as the holder, while Management and Publication Coordinator jobs remain rather unexciting and thus uncontested.

Bennett’s strong uncontested candidacy arguably reflects her solid support within the party, having led the party into new election successes (including the first South West MEP) and astonishing growth over the past two years – now up to 17,000 members from around 14,000 when she was first elected.

Ballot papers will be delivered in late July/early August. Keep your eye on the doorstep, members – this time, your own!

Members can view the full candidate statements here after logging in – https://my.greenparty.org.uk/node/5565

Here’s the full list:

GPEX elections 2014Meanwhile, there’s still time to vote in the prioritisation ballot for what policies will be decided at the upcoming Green Party conference – make sure you do so if you are a member: https://my.greenparty.org.uk/node/5480

UNion Win – United Nations reverses derecognition

Some good news from the international online union campaign group LabourStart (make sure to sign up if you’re not already a part of it)…

(As an aside, it begars belief that the UN took such a dramatically anti-labour move in the first place, when the generally pro-worker International Labour Organisation constitutes such a significant and strong part of the UN)

Eight months ago, I wrote to all of you asking you to support a campaign for workers’ rights at the United Nations.

On 11 July last year, UN Secretary-General Ban Ki-moon derecognized the staff unions representing the organization’s 65,000 staff, many working in dangerous locations and war zones.  I asked you to join me in sending off protest messages to Ban Ki-moon, and you did in your thousands.

This week, I learned that our efforts paid off.

According to Ian Richards, President of the Coordinating Committee of International Staff Unions and Associations, “the campaign by UN unions to restore the recognition rights of UN staff has secured a successful outcome.

“On behalf of the unions of the United Nations, I would like to thank you, LabourStart and your 14,000 members who sent emails to UN Secretary-General Ban Ki-moon for their fantastic support during the campaign. Your efforts helped persuade the Secretary-General and his team that the UN should live up to its principles on human rights and labour representation.”

You can read the full text of Ian’s message here.

I thank you too — we did well.

And we demonstrated yet again the incredible power of the new communications technologies when combined with traditional trade union solidarity.

Have a great weekend!


Eric Lee

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