tories

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.

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

Cameron’s welfare speech is just scapegoating: young people aren’t the problem

[This was originally posted at the University of York coThe Yorker here]

‘On my first night as Prime Minister, I said we would build a more responsible society.’ Such were the words of Cameron last week. And apparently that’s what the coalition is doing – building a more responsible society. Take a closer look.

You might imagine that a responsible society would be one where banks weren’t rigging interest rates, where millionaire celebrities (not to mention corporations and financiers) weren’t able to dodge vast sums of tax then get away with a meek apology. Or where bankers who’d contributed to the financial crisis weren’t seen off with golden handshakes (or were still in their jobs), but were seen off in handcuffs.

Instead the Prime Minister took the opportunity not to announce a crackdown on greed and corruption in the financial sector, to introduce a strict anti-tax avoidance rule, or to legislate on taking those responsible for the banking collapse of 2008 to justice, but to suggest abolishing housing benefit for the under-25s, thus forcing 385,000 young people to beg, borrow, steal or move away from their jobs to live with their parents.

Imagine it. A 24 year old couple with a child, working on the minimum wage and unable to keep up with spiralling rent costs. Cameron’s master plan for creating ‘responsibility’ would force them apart or to move in together with one of their parents, perhaps several hundred miles away – where there may be no work. Such a young couple, like most of the small percentage of housing-benefit claimants who happen to be under-25, are to Cameron part of the mythological ‘something for nothing culture’ he ranted about last Monday.

Of course, Cameron has hinted he dislikes the irresponsible tax avoidance referred to earlier. ‘Morally wrong’ he described Jimmy Carr’s scheme. Such comments, however, are not quite the same as actually doing something about it, when according to research by the PCS union it costs us up to £120bn a year – a damn sight more than the £1.8bn keeping rooves over young people’s heads costs. Yet it’s a lot easier to attack those struggling young non-voters than dealing with rampant tax-dodging when the HMRC staff has been slashed by a quarter. Whoops.

If you glanced at the papers last week you would have laughed and then cried. Straight after announcing his hopes of abolishing housing benefit for people under 25, Cameron announced another seventeen further welfare ‘reforms’. You might think – and I don’t intend to play divide and rule here – that a few of these reforms would be aimed at wealthy pensioners – the elderly making up well over half the annual welfare bill.

But no. To stay are the free TV licenses, bus passes and non-means tested winter fuel allowances for those in retirement who, you know, just so happen to vote Conservative. To go is social security for those who can’t find work, and benefits in the North (which just so happens to hate the Tories anyway) are to be intentionally disproportionately cut.

I may just be being cynical. It may just be that even though under 25s make up less than 8% of total housing benefit claimants, and that just one in eight of claimants is out of work, and even though we’re an easy target because as young people we don’t really vote – that despite all this, we are legitimate targets. I would be cynical if I thought that actually the tax dodgers, bank executives and their cronies at the top should be the real targets, not struggling twenty-somethings embedded in an ill-defined ‘culture of entitlement’ when youth unemployment stands at 22%.

I’ll leave it for the man himself to finish – welfare is ‘about the kind of country we want to be – who we back, who we reward, what we expect of people, the kind of signals we send to the next generation.’ Do we want to send the signal to the next generation that large-scale economic problems of high rents and lack of jobs are their fault? That it is not a right to have a roof over your head but a privilege?

Cameron’s ‘responsible society’ isn’t any such thing. It’s a place where the non-voters and the desperate pay the price for the real ‘culture of entitlement’ that is neoliberal capitalism.

Unitary Councillor claims 40% ‘Supporting People’ cut won’t affect the vulnerable

About three months ago I wrote to my Tory councillor, Fiona Ferguson, to ask that she vote against the 40% cut to the Supporting People grant, which funds homeless and vulnerable support services across Cornwall.

Here’s the main part of the letter:

Cornwall has some of the lowest wages in the UK, and some of 
the most expensive (and indeed most insecure) housing.
This makes people hugely vulnerable to homelessness.

The Supporting People scheme, of which the funding has remained
relatively consistent for this year as the last, is now being cut by
40%. This is putting thousands of people - not just the homeless, but
the elderly - at risk. With an increased homeless problem, extra strain
will be put on both the police and the NHS, and will be
counterproductive if the aim is to save money. Homeless people suffer
significantly more health issues - both mental and physical - and are
also more likely to commit crime to survive.

I am asking earnestly as someone you represent to vote to save the
Supporting People funding if and when it arises in a council meeting.

Well, she did eventually get back to me – three months later. I may have been a little bit scathing in my reply (thanking her for her ‘prompt response’) – but it is simply unthinkable that a near halving of the grant will ‘not adversely affect vulnerable people’. The fund is solely targeted at the vulnerable. Cutting off 40% of their support funding, will, however much ‘bureaucracy’ you abolish, adversely affect them. Even under the existing arrangements Cornwall has the second highest rate of homelessness in England, and it seems inevitable that this will increase dramatically because of the cuts.

She claims the council are having to make ‘difficult decisions’, but really, difficult for whom? Most of the councillors (an honorable few excluded) will barely be affected by these cuts. These cuts are difficult, not for upper middle-class councillors deciding what public services to slash most, but for those on the edges of society – the easy targets – those who don’t vote. The council have millions in reserves. They could have prevented this cut. And Fiona Ferguson, a highly influential Tory in the Unitary Council, could potentially have tipped the voting balance.

The cuts to the Supporting People grant will make life unbearable for many in the county. In my subsequent response, I ask her to U-turn on this decision. If not, I hope my fellow constituents will, by the time 2013 comes, realise councillors like these do not defend the interests of people in Cornwall – and, without a shadow of a doubt, local voters will act on that realisation through the ballot box.

Here’s her full response to my initial letter:

I have looked at this carefully and am satisfied that the cuts should
not adversely affect vulnerable people, although they will involve some
different ways of working and the reduction of margins to certain
providers.  Some services will be dropped altogether eg warden services
for sheltered accommodation where residents do not want or need it. A
great deal of work has been done with providers to safeguard this and it
will be closely monitored.

We are having to make difficult decisions.  As this was a ring fenced
budget in the past, it is clear that the council did not always get the
best value for money  and the cost it paid for the same service differed
dramatically between providers.

The national movement made local – updates for action in Cornwall

There are a few events taking place over the next coming of months which might not be worth missing. The recent Supporting People demonstration outside County Hall showed that more and more are willing to actively oppose the cuts – but there’s a lot more on its way.

Firstly, the increasing activity on the anti-cuts front in Cornwall. With the NHS consultation touring the area – and apparently hoping no one turns up – a perfect opportunity is offered for those who oppose the insidious privatisation of health-care. People will be out on the streets leafletting all over the county before March 26th to encourage as many as possible to come to the huge March for the Alternative in London this month. If you can help with leafletting, send Cornwall Anti-Cuts Alliance an email at canticall@gmx.co.uk

UK Uncut has been off the radar in Cornwall recently, but the next day of action (whenever that is) should see some interesting actions in Truro, or potentially spreading to Penzance, Camborne, Redruth. Who knows. A library in Bodmin was occupied recently in opposition to library funding cuts, so there are people in most towns willing to put on some form of light-hearted dissent. There will be more intense rebellion in other quarters of the coalition of resistance.

The student movement, for a start. Since 15,000 people took to the streets on January 29th, the movement has become more localised and has manifested itself in a revived occupation season. Glasgow was occupied, and then several others followed suit. I’m sure, with the momentum, Falmouth University compatriots will be willing to enter that exciting status – ‘occupation’ – at some point again. This time, perhaps a lecture theatre would be better than a large cafeteria. Still, tents are better than no tents.

Slightly less radical but no less important is the half-day seminar on the Equality Act at the Eden Project on the 10th May, hosted by Equality South West. Something to look out for no doubt. Also: Take Part Cornwall (where have all these groups come from?) are organising a community citizenship session on the 9th of March on how to campaign effectively and ‘get your voice heard’. There probably won’t be direct action workshops  – but the free lunch looks tempting. Anyway. Back to the important stuff.

Two pieces of new today alone show that there is more than student fees to fight though. Cornwall Council are shutting down recycling facilities at all Sainsbury’s supermarkets in Cornwall, and scrapping £200k of funding for recycling schemes. Instead, private companies will be ‘contracted’ to offer limited facilities in out-of-town areas. Progress? I’m sure this will go a long way to reducing Britain’s waste problem. So with the Unitary Council opting out of green initiatives like this, central government meanwhile are being shunned by South Western Ambulance Service, which is becoming a foundation trust. It will be given more ‘financial flexibility’, but exactly what that means is unclear. Flexibility to lay of more staff or cut wages, perhaps. Or, like the council, to pull in even more private contractors to our vital public services.

And the prospect of a double-dip recession looks ever more likely.

By the way:

Cornwall Anti-Cuts Alliance is undergoing big changes, with plans to launch into a mass, democratic body over the next few weeks. Trade unions are being linked up with as well as local community groups. Updates will be on the Canticall site as soon as possible.

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.

South West Students to Lobby MPs to Save EMA

On Wednesday students from across the South West, including Devon and Cornwall, will be travelling up to Parliament to lobby their MPs not to scrap the Education Maintenance Allowance. The vote to decide the fate of EMAs, put forward by Labour MPs, will be on the day, and will coincide with protests in London and Manchester. The marches, though they have proven divisive, are expected to attract large turnouts as students put the French saying into action – ‘what government does, the streets can undo’.

The UCU in the South West are organising coaches up to London alongside the NUS, though the NUS have decided, to the anger of many, not to support the protests on the day.

Students in Cornwall, Devon and Somerset who wish to lobby MPs in Parliament on Wednesday can contact the regional UCU officer Philippa Davey on pdavey@ucu.org.uk.

And for those who aren’t convinced by the arguments to save the EMA, here’s a video of David Cameron pledging not to scrap it last year –