Lib Dems

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.

Advertisements

Greens now third party amongst students

Students are now more likely to vote Green than Liberal Democrat or UKIP, a recent poll has shown.

Support for the Green Party amongst students is now higher than ever before, with 14% of students backing the Greens – ahead of the Liberal Democrats on 6% and UKIP on 5%, the poll conducted by YouthSight found.

The poll, taken as part of the comprehensive Student Vote 2014 survey, follows another from the Tab this month showing Green support at 12% to the Lib Dems’ 10% and UKIP on 8%.

Siobhan MacMahon from the Young Greens, said: “The Green Party is the only party campaigning for university to be free, as it is across much of Europe. This is one of the many reasons students are leaving the Liberal Democrats and joining the Green Party. Pushing the Lib Dems into third place shows they have rightly paid a high price for their betrayals.

“Students are flocking to the Greens as a serious alternative to the right-wing consensus of the main parties, and Labour, the Lib Dems and the Conservatives should take notice.

“With Green support amongst students higher than ever before, our progressive message for a Living Wage, an end to zero hours contracts, publicly-owned services and a fair deal for the planet is resounding with thousands across the country.”

The Tab survey also showed students supported Green Party policies, such as same-sex marriage, legalising marijuana and remaining in the European Union. The Conservatives topped the poll with 33%, beating Labour into second with 30%, while YouthSight’s survey had Labour on 43% and the Conservatives on 24%.

The YouthSight poll was conducted at the start of April and surveyed over 1000 students. Over 5,000 students responded to the poll on the Tab’s website.

Saturday’s TUC march showed unions are needed more than ever

Credit: Steve Cooke

 

Nick Clegg received an unusual York welcome on Saturday.

Over 3000 anti-austerity protesters marched for ‘A Better Way’ through York to greet the Liberal Democrat Spring Conference being held at the Barbican.

As the Deputy Prime Minister spoke in favour of his motion on immigration, hundreds stood outside the building – a building which York’s Lib Dem council closed while it was last in control of the authority – to vent their anger at the cuts to public services, privatisation and other policies which hit the poorest hardest. Needless to say, the marchers’ chants, boos and cries of ‘shame’ reflected this palpable and genuine rage.

It was rage at everything from the Lib Dem’s propping up the Conservatives in government, to the tuition fee betrayal (Clegg’s crocodile tears notwithstanding), the bedroom tax, the back-door sell-off of the NHS to private companies and – judging by the presence of university lecturers and their UCU union – the dismal state of higher education under this government, with course and department closures, real-terms pay cuts and increasing marketisation.

This was a feeling expressed by the many students on the march too – a bloc that reflected the more radical spectrum of the protest. York’s Socialist Students made an effigy of Nick Clegg himself, hanged off the city walls, alongside a ‘Welcome to Traitor’s Gate’ banner. A grim sight for delegates to behold, in a wealthy former-Lib Dem city where they probably expected a friendlier reception amid Labour authority unpopularity. No such luck.

The TUC-organised demo couldn’t have chosen its day to be more symbolic. Saturday marked International Women’s Day. That very morning, delegates were hit with headlines of ‘Osborne’s tax and benefits changes hit women almost four times harder than men’. Not the best way for the previously centre-left party to celebrate IWD. But who wouldn’t have predicted that the three-year freeze in child benefit would have hit women hardest? Or that the cut in the top rate of tax for millionaires mostly helps rich white men?

Speakers at the rally after the march were quick to point this out. All ten speakers were women – a figure that contrasts sharply with the Lib Dems current level of gender representation. The figure hasn’t been picked up upon, but those 10 northern speakers are more than the Lib Dem’s current number of female MPs in the whole of the UK – and certainly more than at the next election after a number of announcedfemale resignations . Most inspiringly, leading the march were strikers (almost entirely women) from Care UK in Doncaster – workers who have just finished a week-long strike against the company to which their jobs were recently handed over to by the council. They’re facing pay cuts of up to 50% in an attempt to boost profits – and they’re fighting back.

Thirty years on from the miners’ strike, it’s a reminder that unions still matter. In fact, the whole protest – amid hundreds of union flags and banners – served to prove that trade unions, in standing up for the hardest-hit by austerity, are actually more needed than ever in the face of the neoliberal onslaught that is this coalition government (and don’t think the austerity will end with Labour, either). Indeed, the TUC collected 52 full carrier bags of food at the demonstration for local food banks under strain from the weight of a cost of living crisis.

Saturday’s march showed that, with over six million members – the majority of whom are now women – and the ability to mobilise thousands in the cause of social justice, unions still pack a punch. But with just 13% of 16-24 year olds members of what are still the largest democratic civil society bodies, perhaps the biggest message was that our generation needs to get organised. Otherwise, the current austerity measures could be ‘permanent’, to use Cameron’s word.

On Sunday, the People’s Assembly Against Austerity are planning to wave Clegg off as he leaves the city. Given the welcome he got, and the goodbye he’ll receive, he may well get the message that York – with its large student population alongside those hit by benefit cuts – isn’t such a big fan of the Lib Dems, after all.

Credit: Steve Cooke

Credit: Steve Cooke

Osborne’s Autumn Statement wasn’t just class war. It was age war, too

‘Do you remember when people used to retire?’ I can just imagine our generation’s grandkids asking us that in 50-odd years’ time. Our generation – the 1990s crew – will be working into our 70s. That means that a fair few of you reading this, given the vast inequalities in life expectancy in Britain, will be toiling flat-out and non-stop…till we drop.

The budget did nothing for students or graduates – nearly half of whom are in non-graduate roles, from shelf-stackers to baristas and receptionists. A tenth are unemployed. I’ve lost count of the numbers of old uni friends who’ve recently been on the dole. Where they have found work, many are whiling away their hours gaining ‘work experience’ or what anthropologist David Graeber politely termed ‘bullshit jobs’ – roles which serve no useful purpose. You’ll all know many more. The Autumn Statement announcement of a legislated welfare cap of 1% will push them further into the ground amid rising food costs and energy bills.

Neither will their woes – or just early world-weariness – be made any easier by announcement that the government plans to sell-off of the entire Student Loans Company, part of the coalition’s much-mooted £20bn (doubled from their previous aim) plan to flog-off a whole swathe of public assets – from Eurostar to potentially the Met Office, air traffic control and plenty more. It will make the forestry sell-off a couple of years ago look like a walk in the park. Pardon the pun.

What will it mean to us? Eventually, the terms of our loans will change. Where companies can no longer make a profit off our debt, they will seek to remove or lift the interest rate cap. And with that, we’ll have a de facto rise in tuition fees. Since the loans will be in private hands, we’ll have no say over the matter.

The implications are of course far deeper than this. If not even our student loans are publicly owned any more, our education system certainly won’t be either. Thus Higher Education becomes a commercial enterprise with barely a whisper of democratic discussion.

It’s not just privatisation that we have to contend with. The next few years will see £1bn worth of extra cuts year on year, further limiting demand in the economy and thus jobs growth. The dole queue won’t be going down any time soon. Nearly a million of our generation – five years after the crash – still remain stranded without work.

Already 300,000 public sector jobs have been slashed since the government came to power – on a pledge, cynically, to protect ‘front-line services’ – and the Institute for Fiscal studies reckons the another 900,000 job losses are yet to come by 2017/18. Brace yourselves.

The problem isn’t even lack of GDP growth – although there has been a lot less of it since 2010. The real issue, as Labour have belatedly tacked on to, is that wages are stagnating, with workers £5000 worse off since the crash. Labour shouldn’t take the credit however – wages were stagnating under them, too, with a minimum wage that wasn’t fit for purpose and zero hours contracts rearing their head even before 2008. And Ed Balls’ response to the Statement in the Commons was pretty pathetic, by most accounts.

Nonetheless, we’re still right to ask: recovery? What recovery? If there is one, who’s recovery is it? It certainly isn’t young people’s.

It’s not as if the pain of austerity is worth it even on its own terms – annual borrowing is £111bn, compared with the £60bn that Osborne said we’d get this year.

Thursday’s budget, in an era of leaks, was largely without surprises. But that’s the problem. We’ve grown used to austerity, becoming reluctant masochists. There are hopeful signs though that students are starting to fight back – this week has seen a wave of occupations sweep universities across the country, from Sheffield to Birmingham, Sussex to the University of London. Everywhere, of course, met with a heavy-handed response.

But hey, it’s better to die on your feet than to live on your knees. I can sense that our generation – faced with the in-your-face affront we saw in the Autumn Statement – might not be pliant for much longer. Because it’s not just class war any longer, it’s age war too.

Stop the Privatisation of Royal Mail – Emergency Motion to Green Party Conference

Yesterday the government confirmed its plans to sell of Royal Mail within the next few weeks. I’ve drafted the following emergency motion to this weekend’s Autumn Green Party Conference in Brighton condemning the sell-off – please write in the comments box, tweet me (@josiahmortimer), or message me on Facebook with your name and local party if you support it!

Stop the Privatisation of Royal Mail

In light of the government’s announcement on the 12th September that it intends to privatise the Royal Mail ‘in the coming weeks’, Conference notes that:

1. The Royal Mail is a 497-year old institution which serves the public, not the interests of shareholders, and should be protected

2. 70% of the public oppose its privatisation

3. Privatisation of other sectors such as rail, energy, telecoms and water has been an untold disaster, leading to higher prices, greater inequality and worse services. The Royal Mail is likely to be no different

4. In order to sell off the Royal Mail, the government has had to nationalise its debts to ‘sweeten up’ the sale for private-sector profiteers – a classic case of ‘socialism for the rich’

5. If the sell-off goes ahead, rural areas are likely to be cut off, workers’ conditions will be undermined, and the universal service obligation of six-day deliveries is likely to be threatened

Conference instructs the Green Party Executive, and the Green Party’s elected representatives to:

1. Throw the party’s full weight behind the ‘Save Our Royal Mail’ campaign[1]

2. Support the Communication Workers’ Union’s industrial and political fight against the sell-off by all means possible, including backing strike action

3. Write letters to the press and to Vince Cable calling for the government to abandon the privatisation plans

4. Sign the Change.org petition demanding Vince Cable ‘Save our Royal Mail’[2]

5. Send a message of solidarity to the CWU and the Save Our Royal Mail campaign

6. Attend and support any protests which take place against the privatisation, and to help organise urgent demonstrations where possible

Conference also urges all Green Party members to likewise take the aforementioned actions.

If this motion is passed, conference instructs the Press Office to issue a press release about Conference’s decision and the party’s wholehearted opposition to the privatisation of the Royal Mail.

Proposed by Josiah Mortimer, University of York Green Party

The Fight For Education: After the EMA Vote

The Tory-led coalition had their way today, and voted to scrap a life-line to thousands of poorer students. A bid by Labour to save the Education Maintenance Allowance was defeated by Conservatives and Lib Dems who reject the idea that young people from low-income backgrounds should be encouraged to go on with further education. By doing so, they have condemned a generation to unemployment, a fact backed up by the latest figures: almost a million under-25’s are unemployed – a record high.

Students in Cornwall and other parts of the UK travelled to London to lobby MPs, to persuade them not to abolish the EMA scheme. Many were ignored. Some MPs spoke only to single students, despite many travelling hundreds of miles during the exam period. Some MPs would not even stop to explain their decision to betray young people. This betrayal will not be met with such apathy by students. The next couple of weeks will see more demonstrations nationwide to fight for education, to fight for our futures.

What are the NUS doing to support the struggle? They recently passed a ‘radical’ document calling for support for the demonstration in Manchester on the 29th – while completely ignoring the protest in London, the centre of power, and the national day of action on the 26th. Anti-cuts groups need to be becoming active in their student unions, in trade unions and local groups to support these demonstrations, regardless of which organisation is ‘leading’ them.

Billy Hayes of the CWU has been calling for unions to do exactly that,  declaring workers and students ‘allies in misfortune’, and heralding a ‘serious fight-back’. Other unions have been slower to take up the call. But as Hayes asks, ‘are we going to fight for our rights’ or not?

EMA could be funded, three times over, if only private schools paid VAT on their fees, meaning these elite institutions finally give something back other than Tory-cabinet ministers.

There is no fairness in the scrapping of the EMA. Peers in the House of Lords can claim an allowance of up to £300 a day just for turning up. And now our future doctors, academics, scientists and teachers are being denied £30 a week to continue with college. The Tories and Lib Dems can be certain. Once exams are over, there is going to be a serious surge of support for the fight-back, and it will not stop until those at the top find out what ‘being in this together’ really means.

This is our generation’s 1980s

For a lot of people under 30,  the ’80s seem not much different to any other decade before then – a dark, bygone age, which though still despised, is viewed as somehow irrelevant nonetheless. That may be starting to change. Though the Thatcher era shifted the main stage of politics to the right, the very opposite may now be happening. Just as the neoliberal doctrines of Thatcher’s time were challenged by socialists – Scargill’s NUM being the Conservatives’ staunch and powerful opponent for several years – now we are seeing a new generation of increasingly outspoken students and activists willing to take on the Tory-led government. Whether this movement’s fate will be the same as the miners’ remains to be seen.

Take one comparison. The NUPE (a large public sector union) in the 1980s was drawn sharply to the left because of the sheer scale of the attack on workers’ rights and conditions coming from the Tory government. Last month, Unite (the largest British union) elected Len McCluskey to general secretary on a socialist slate. It seems the force of right may be increasingly counterbalanced by a growing left – and one that is younger and more vibrant than the left of the 1980s. Unions will have a huge role to play in the fight against the cuts, but the student movement looks set to become more prominent in the fight than was expected – especially after aeons of the old ‘lazy/apathetic student’ stereotype.

Crises polarise politics. But politics becomes even more polarised when those in power betray the electorate – and I’m not just talking about the Lib Dems. Cameron was calling any VAT rise ‘regressive’ during the election campaign, and the Lib Dems essentially campaigned against a VAT rise altogether. In just a week it will go up to 20% – the highest it has ever been. Similarly, in ’79, Thatcher had promised not to double VAT, a promise only narrowly kept after she raised it from 8% to 15%.

In No Such Thing As Society, Andy McSmith points out that the Thatcher years merely resulted in a redistribution of wealth from the poor to the rich. Indeed, the UK’s richest boosted their wealth by 55% last year, and executive pay at the top is literally thousands of times the average wage.

There are countless more examples showing the parallels between today and 30 years ago. Thatcher’s attempts at cutting public spending actually increased public spending as a proportion of GDP, because as simple economics dictates, putting people out of work does not solve our financial problems. What is does do is increase the benefit burden and lower tax revenue.

The astonishing emergence of the UK Uncut anti-tax dodging movement finds little company in the 1980s, but that is not to say tax dodging was not an issue. While over 3 million were unemployed, the company Vestey was raking in £4m profits. How much tax did the business pay on it? £10. Ten. Pounds. Sounds a little like Sir Green, does it not?

And as our financial woes were exacerbated at home, our international relations were becoming increasingly fraught, with the threat of nuclear war at the back of everyone’s minds. The narrative of the Cold War does not need to be retold here, but the West/USSR tensions are not unlike the tensions today between the ‘West’ and Iran, North Korea, China etc, viz ‘Eastern’ nations. Indeed our plan to upgrade the Trident nuclear missile system is a mirror image of Thatcher’s upgrading of the Polaris system to Trident, at an immense cost to the tax-payer.

The police, as an arm of the state, seem determined to destroy legitimate political dissent. As their tactics become more violent, so the reaction of demonstrations will become more volatile. Images like mounted police batoning strike pickets in the 1980s may become more frequent in the age of austerity.

We cannot predict what will happen over the next four years. But with the resistance to the cuts getting more support by the day, with more outspoken union leadership and with campaigns such as the Coalition of Resistance and Education Activists’ Network working alongside each other for a common cause it is looking like this decade may become the our generation’s Thatcher years, only this time, we’re seeing former miners linking arms with their sons and daughters to move the goal-posts back to the left.