Ed Ball's mentor, Gordon Brown, was responsible for Private Finance Initiatives, cuts, privatisations and other pro business, City friendly policies. Now Ed supports the call for a Plan B put forward by many Economists, who last year told us that the Con Dem budget strategy would work. Perhaps Ed should listen to unions such as PCS instead, who argue that there is an alternative to the austerity measures, IMF cuts and attacks on working people.
Thanks to Stuart Richardson of Birmingham Socialist Resistance for this contribution:
Taxing the Rich
Readers will have seen publicity this morning on the letter in the Observer from more than 50 prominent economists calling for a plan B on the governments deficit reduction plan. It is labelled by the BBC as a contribution from left wing economists actually many are from the political establishment and former advisors to David Cameron.
Their main point is expressed in the sentences "As economists and academics, we know the breakneck
deficit-reduction plan, based largely on spending cuts, is self-defeating even on its own terms. It will probably not manage to close the deficit in the planned time frame and the government's strategy is likely
to result in a lot more pain and a lot less gain."
These points have been made by many observers including the TUC. More interestingly is there viewpoint
on TAXING THE RICH a major theme of the Anti-Cuts movement. They propose among other things
"*by clamping down on tax avoidance and evasion, as well as by RAISING (my emphasis) taxes on those
best able to pay"
This is in complete contrast to the statements of Ed Balls, shadow chancellor of the exchequer, speaking
this morning on Sky News. He supported the big cuts in corporation tax introduced in the last budget and
amazingly said the rise in capital gains tax by the Condem government "was not wise". But to explain this
we need a little background.
Recent changes in taxation of the Rich
The super rich are subject to three main taxes other than income tax. These are corporation tax, a tax on
company profits, capital gains tax is a tax on trading property and shares and Inheritance Tax paid when a person dies. If you have many millions you will mainly pay capital gains tax on buying and selling property and shares. The rate of corporation tax will also affect your returns because you will receive dividends from company profits.
Shortly after Mrs Thatcher came to power and for the majority of her term in office the top rate of tax on
the super rich was 60%. This was reduced to 40% in the famous 1988 Lawson budget. When Blair came
to office the top rate was still 40%. But after the business friendly Blair/Brown governments corporation tax had been significantly reduced and capital gains tax had been reduced to an amazing 18%. This is ofcourse less than someone working for measly £6 an hour would pay. Part of the reason for the massive financial black hole which developed during the last Labour government was this massive cut in the taxation of the super rich.
The Condem government's shift of taxation onto ordinary working people is illustrated by the rise in VAT to 20% and the cuts in corporation tax. In several western countries the rate of corporation tax is between 40-50% whereas the government proposes to go to a rate of 24%.
The one small token in difference to this was the rise in capital gains tax under pressure from the Liberal Democrats. It was increased last year to 28% for higher rate taxpayers from Labour's 18%. NOW ED BALLS SAYS THIS INCREASE IN TAXATION OF THE SUPER RICH "WAS NOT WISE." We have supported campaigns against Free Schools. According to the Times Educational Supplement 27.5.11. page 16 this is not Labour's policy. The TES reports
"Labour softens free-schools stance. Shadow education secretary Andy Burnham has softened his stance against the Government's free school policy. Speaking at the Education 2011 conference in
earlier this month, he said Labour would not oppose every free school." What next!! London