BREXIT and TAX

VAT was introduced in the UK in 1973 as a condition of joining the then European Economic Community, the predecessor of the EU. Changes to the VAT rules require the unanimous agreement of all 28 EU countries. Originally introduced in the UK at 10%, these rules now require a minimum standard rate of 15% with one or two reduced rates, no lower than 5%, for certain specified goods on a pre-approved list. Further reduction in the VAT rate, including the use of a zero rate, is only allowed under EU rules for goods that have been taxed at that lower rate continuously since 1991. It is, therefore, under continued EU membership, a highly inflexible tax, but one not without merits. By requiring firms to deduct VAT paid on purchases from suppliers, it avoids the double taxation problem that arose with its UK predecessor, Purchase Tax. It is, nevertheless, highly ‘regressive’, i.e. it falls disproportionately on those on low incomes and leaves capital essentially untaxed. It is therefore unsurprising that, following the financial crash in 2008, the government relied on VAT to bail out the banks under its austerity strategy. VAT now contributes 21% of all the tax raised, up from 18% in 2009, and the amount raised has increased by 60% since then[i]. VAT has also made no contribution to reducing carbon emissions to help halt global warming.

In its 2017 General Election manifesto, the Labour Party called for VAT to be restricted to its current range of goods and services. However, according to the Communist Party pamphlet on The EU and Brexit – questions and answers [ii] , even this very modest proposal would breach EU rules. The potential for a progressive tax policy after we leave the EU would, however, be considerable and VAT could play a useful part in this. As was argued in From Each According to Their Means[iii], free from the EU we could vary VAT rates to meet policy objectives and give workers rebates paid through National Insurance. VAT could thus be adapted to incorporate a carbon tax along the lines of the fee and dividend model proposed by James Hansen and endorsed by the Communist University on South London in its discussion paper on Global Warming.[iv].

The people have spoken in the EU Referendum. The only vote we need now is a General Election so that the opportunities it opens up, including the reform of VAT, can be seized.

 

Footnotes

[i] according to UHY Hacker Young, quoted in Economia, February 2019

[ii] Available from the Communist Party for £1 plus postage. http://www.communist-party.org.uk.

[iii] Available from the Communist Party for £2 plus postage https://www.communist-party.org.uk/shop/pamphlets/2025-from-each-according-to-their-means.

[iv] https://communistuniversity.wordpress.com

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WHAT IS BREXIT FOR?

Discussion around Brexit and the Withdrawal Agreement has concerned the Irish border and the Backstop, the loss of tariff-free access to the EU and the implications for the movement of people across borders. Remainers occasionally express concern about a potential loss of employment rights but this has little substance other than to attract naïve social democrats to the Remain cause as the EU has done nothing to resist the increasing casualisation of labour, the erosion of collective bargaining rights or anti-trade union legislation. The Big Issue that no one is debating is what sort of country will Britain be post-Brexit.

Neo-liberals tend to keep quiet about their ambitions for a post-Brexit Britain. Their dream is for a Singapore style economy twenty miles off the coast of France. This means an economy that is exploitative, de-regulated, minimally taxed, gutted of its social services and open to capital from across the world with no questions asked. Close ties with a USA are called for if only to ensure that we can continue to rent Trident and its up-grades.

Communists have a different ambition. If we are quiet about it, it is simply because the mass media does a good job ensuring that our views are not reported. We want a socialist Britain run for the benefit of those who live within its shores, not the owners of footloose international capital. To get there we will need a progressive tax system incorporating many of the ideas in our pamphlet From Each According to Their Means  (1). But as we point out in this pamphlet, many of these ideas – a land value tax; varying rates of VAT with rebates for workers to address social needs; unitary taxation of corporate profits to nullify the use of tax havens; and a tax and dividend carbon tax as advocated by  James Hansen to address global warming – would be impossible under continued membership of the EU or the Single Market.

So in the end the complexities melt away and the choice is a straightforward one: accept the block on progressive reforms that are a pre-requisite of social revolution or seize the opportunity to begin building socialism – provided, as Marx recommended in the Communist Manifesto, that we first “settle matters with our own bourgeoisie”. 

 

  1. Available from the Communist Party Shop at http://www.communist-party.org.uk/shop/pamphlets/2025-from-each-according-to-their-means.html

 

 

 

Global Warming

The Croydon Branch of the Communist Party has enthusiastically supported the decision by Croydon TUC to invite Derek Wall to speak at a public meeting at 7.30 pm at Ruskin House on Thursday, 10 January. Derek Wall is a former Principal Speaker of the Green Party but, unlike many greens, he recognises that climate change  cannot be overcome without “challenging capitalism”.

Communists agree but would go further than merely “challenging” capitalism. We seek its replacement by socialism and recognise that the scientific evidence indicates that time is running out. Furthermore, as was argued in the recent discussion paper from the Communist University in South London (CUiSL), global warming is a class issue that can only be resolved by social revolution. The only viable remedy open to capitalism if mass extinction is to be avoided is the carbon tax model proposed by James Hansen in which the tax is set at a sufficiently high level to keep fossil fuels in the ground and the revenues are distributed to citizens, not corporations. As recent decisions on fracking, airport expansion and defending Saudi Arabia demonstrate, those who own capital will never tolerate this. Their strategy is

A programme of developing green energy and promoting energy saving while leaving fossil fuel consumption to market forces

Making workers pay for the resulting costs and unavoided environmental damage

Protecting the capitalist elite even if this means retiring them to protected, secure environments

It doesn’t, however, matter how many windmills we build. If there are profits to be made from oil and gas extraction, this will continue until CO2 levels reach a point where the oceans boil dry – or, more likely, a tipping point is reached and we tumble into mass extinction.

WHY COMMUNISTS SUPPORT BREXIT

Communists have steadfastly supported Brexit, or, more specifically, Lexit, the left alternative to the Tory ambition of turning the UK into the “Singapore of the West”. While we found much of the official Brexit campaign distasteful and dishonest, and while we are concerned about how the official Brexit campaign was financed, our support has not waivered. In part, this is because we can draw support from the Communist Manifesto where Marx and Engels wrote:

Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle. The proletariat of each country must, of course, first of all settle matters with its own bourgeoisie.

While communists do not treat the works of Marx and Engels as holy writ, we do find their overall logic reliable, persuasive and borne out by subsequent history. Their advice here is therefore worth re-examining and can help us navigate the current confused and confusing Brexit debate on the Left.

Written some 170 years ago, the terminology used by Marx and Engels is now a little obscure. The term “proletariat” is no longer in everyday use. While it is still employed (in Marxist economic theory concerning labour value), its meaning in the Communist Manifesto, as Engels made clear in his preface to the 1888 English edition, is simply “workers”, i.e. all those who live by selling their labour and who lack an alternative source of sustenance. Similarly, since Marx and Engels employed the term “bourgeoisie”, it has come to mean the aspirational, salaried middle class. Marx and Engels were not referring to these. They were referring to “capitalists” and what we now sometimes refer to as “the 1%”.

Given these clarifications, what did Marx and Engels mean by the struggle between workers and capitalists being “though not in substance, yet in form….at first a national struggle”? This was their recognition that, even in the first half of the nineteenth century, national economies were inter-connected and the exploitation of workers does not stop at national borders. Thus the struggle between workers and capitalists takes place initially within the context of the nation state and workers are therefore well advised to concentrate first on the struggle for state power before seeking to change supra-national structures.

With these clarifications in mind, how should we apply the advice in the Communist Manifesto to the current Brexit situation? There are undoubtedly risks for workers in Britain in any meaningful form of Brexit. These risks are especially acute for workers in our export manufacturing industries and those employed by our “financial services industry”. As the excellent film The Spider’s Web, recently shown at Ruskin House to unanimous acclaim and now available on U-tube, argued, much of this activity is parasitic and concerned with tax avoidance, but it does,nevertheless, employ many ‘workers’ as defined above. There will, however, be economic gains from curtailing much of this activity, and these gains can be put to good use, once we are outside the EU, promoting more useful employment. Less of a threat is the loss of workers’ rights bestowed by the EU on workers in Britain. The most worthwhile worker rights that still exist are those we won ourselves in domestic struggle. The EU did nothing to protect workers in Greece in 2015 and has done nothing to inhibit the disastrous growth of zero hours contacts and the undermining of trade union rights in the UK. The loss of its ‘protection’ will be of little significance.

Notwithstanding the risks to export industry and City jobs, Brexit can provide an opportunity to “settle matters” with our own bourgeoisie, i.e. the capitalists who own and run our country and their hangers on and spokespersons. The first step must therefore be demand a general election so we can kick out this rotten and corrupt Tory government and give a Corbyn led Labour government the opportunity to negotiate a Brexit that ensures that the interests of workers and their families are prioritised. The Tories, with the assistance of the Lib Dems, made us pay for the 2007-8 financial crisis. They must not be allowed, with the assistance of the Ulster Unionists this time, to make us pay for turning the UK into the “Singapore of the West”.

Bring it on!

Writing in the current edition of the London Review of Books (6 December 2018), Rory Scothorne comments that, despite Corbyn and McDonnell’s ambitious proposals to transform Britain’s economic structure, constitutional reform is not amongst Labour’s priorities, and the electoral battle-bus “trundles down the same old parliamentary road towards the same old disappointments”. This moment of constitutional breakdown, he argues, demands a constitutional revolution. Instead the Labour Party is constrained by “adjectival manoeuvres”: Hard Brexit, Soft Brexit, Chaotic Brexit, No Deal, Tory and People’s Brexit. As communists, while recognising that they are dialectically related, we tend to give primacy of economic structure over constitutional superstructure, but Scothorne may have a point when he criticises Labour’s historic tendency to stick with existing constitutional structures. Reform not revolution has always been the Labour approach and , even under a Corbyn-led government, this will doubtless continue.

In his extended editorial in the Morning Star on Saturday, Ben Chacko warns against the expected siren calls for Labour to enter a national government when May’s transitional agreement is rejected on Tuesday and the constitutional superstructure begins to wobble. Ben Chacko’s advice, which we can reasonably assume reflects that of the Communist Party’s Political Committee, is sound. The short-term priority for us following Parliament’s rejection of the May deal has to be to agitate for a general election in which we can exert maximum pressure on candidates (especially Labour ones) to ensure that the interests of the working class are given priority as we leave the EU, not the interests of those responsible for eleven years of austerity – the unsavoury gang comprising Big Business, bankers, the 1% and their spokespersons in Parliament, the Tories, Lib Dems and Labour Blairites.

So bring it on!

BBC or BgovBC?

In response to the news that 320,000 people are homeless in Britain, an increase of 13,000 or 4% on last year, the BBC dutifully reported the government response that it is “investing £1.2bn to tackle homelessness”.

In response to news that Philip Alston, the UN rapporteur, said that the government should not rely on organisations like foodbanks “to keep people alive”, the BBC dutifully reported the government response that “it had lifted hundreds of thousands of people out of poverty and into work”.

In response to news that Dame Donna Kinnair of the Royal College of Nursing said that hospitals this winter were facing a shortage of both beds and staff with “patients waiting on trolleys in corridors”, the BBC dutifully reported the government response (made through a NHS spokesperson so as to distance itself from direct responsibility) that they had “brought forward £145m of funding for hospitals in England to upgrade emergency departments and wards”.

One is tempted to speculate that there a secret clause in the BBC’s Charter requiring it to conclude every news item reflecting badly on the government with the government’s response, however irrelevant, inadequate or anodyne it might be. In any event, it is self-evident that such responses will now invariably be included.

Some bias is, of course, to be expected in all mainstream news reporting in a capitalist society, and “public broadcasting” is no exception. Furthermore, pro-establishment bias isn’t going magically to disappear on Day One of a Corbyn government. Even if the top people at the BBC could be replaced – and they will probably manage to cling on to their well-paid jobs – the class bias in the composition of BBC staff could take a generation to correct.

Is there anything we can do about it? Not a lot other than to switch off BBC news and seek out other sources of news. Channel 4 News is far from perfect, but is far less biased than the BBC. The internet provides many sources of objective reporting if you access it critically and judiciously; and there is the one national daily newspaper that is worth reading: the one the BBC is forbidden to review or even mention – the Morning Star.

 

References:

https://www.bbc.co.uk/news/education-46289259.

https://www.bbc.co.uk/news/uk-england-tyne-46130355

https://www.bbc.co.uk/news/uk-england-46277828

There is no parliamentary road to socialism

In the light of its concern that not all of the £8m Arron Banks gave to the unofficial Leave.EU campaign came from profits generated in the UK, the Electoral Commission has referred him to the National Crime Agency. This will only provoke hollow laughter from communists.

The Electoral Commission may have dragged their feet over this matter, but they invariably do this when the government itself is threatened. Amongst other examples is their protracted investigations into dodgy election expense returns by Tory candidates who now help prop up May’s wafer thin parliamentary majority. The work at the Electoral Commission is done by civil servants and, however independent they might consider themselves, they are, just like the legal system, part of the machine, share its outlook and priorities and are led by individuals drawn from its elite.

The central issue is not the feebleness of the Electoral Commission, it is the very nature of parliamentary democracy and its tainted offshoot, national referendums. Universal suffrage was originally feared by the capitalist class, but these fears were gradually allayed and, by the time it was finally attained in 1928, the system had learnt how to cope with the threat it posed to capitalism.

  • MPs were no longer to be mere delegates from their local parties – they were independent persons, responsible to the entire electorate, not those who selected them.
  • The mass media was owned by capital and public broadcasting was under the thumb of the government.
  • There was lots of lovely, unaccountable money sloshing about to lobby and buy influence.

Nothing has changed!

What is the solution? Not another auction/referendum on EU membership with Big Business buying the result it prefers. A general election would be by far the best remedy for the deficiencies in the last referendum; but, while we wish Corbyn well and are most impressed with the energy and enthusiasm of his supporters, they should not be misled into thinking that there is a parliamentary road to socialism. Freeing ourselves from the pseudo-democracy offered by the European Parliament and from the restrictions imposed on labour rights and nationalisation by the European Commission would be a step in the right direction, but what is really needed is

  • Root and branch democratic reform (or, more accurately, revolution) in which money, lobbying and a distorted media no longer plays a part and democracy extends into every aspect of our lives, including the workplace.
  • Recognition that the purpose of an MP or councillor is to represent, until recalled, those who selected him or her. It is not a career.

A Trade Deal with the USA?

The Department for International Trade is inviting comments on a possible trade deal with the USA following Brexit. They invite you to leave your comments here by 26 October.

Is it worth responding? It might be worth the effort for the record, but don’t expect anyone at DfIT to be paying much attention to what you have to say. How can they even be contemplating a trade deal with the USA until it

  • rescinds its withdrawal from the Paris Agreement on Climate Change (COP 21)
  • lifts its blockade of Cuba
  • re-joins the deal with Iran on halting its nuclear programme
  • lifts trade sanctions on Venezuela and stops intervening in its internal politics?

Given these changes we could then contemplate a trade deal with the USA provided it protected our public services, especially the NHS, did not inhibit public ownership, outlawed trade with Israeli businesses operating from the occupied West Bank, protected collective bargaining and the right of employees to withdraw their labour and promoted common policies to protect the environment and discourage fossil fuel extraction.

As Donald Trump would not be interested in a trade deal which incorporated these concerns, one might simply respond by asking DfIT if they have lost their senses

Socialism or death

The Paris Agreement (COP21) in December 2016 is intended to encourage fuel efficiency and develop non-fossil fuels so as to limit global warming to 1.50C above pre-industrial levels. Will it?

The USA has given notice that it will withdraw from COP21 by 2020. This will not help, but the strategy itself is flawed. As the discussion paper on Global Warming from the Communist University in South London (CUiSL), currently in the proof reading stage, argues, catastrophic climate change will only be avoided if fossil fuels are left in the ground. There is, however, no indication that this is happening. According to a forecast from the International Energy Agency, annual fossil fuel consumption is set to increase by the equivalent of 82 trillion barrels of oil by 2040[i]. This is 14% more than at present and is forecast despite a forecast increase in renewable and nuclear energy of 67% by 2040. These will still be contributing less than a quarter of our energy by 2040.

This failure to act to halt global warming should not surprise us. As the CUiSL discussion paper also argues, capitalism is simply incapable of addressing global warming. Its rationale is the accumulation of capital by generating profits. Due to market-based discounting, its time horizons are too near, leading it to under-estimate catastrophe in coming decades; there is simply too much profit to be made today and in future from fossil fuel extraction to leave it in the ground; and there is too much capital tied up in fossil fuel extraction to see it written off. Whether or not every apologist for capitalism recognises it, their mantra is “Pump, baby pump”. Ours should be borrowed from the Cubans: Socialismo o muerte (Socialism or death). Cubans use it to affirm their willingness to die to defend their system. We need to adopt it in recognition that our system, capitalism, will kill our grandchildren if we don’t begin to take steps now to replace it with socialism.

[i] https://www.eia.gov/todayinenergy/detail.php?id=26212

 

 

 

The NHS and Democracy

A well-attended meeting at Ruskin House last night (13 September 2018) called by Croydon TUC was left in no doubt that there has been a covert strategy, intensified since 2010, to dismantle the NHS and feed it to US-based health corporations. Addressed by Dr Bob Gill, a Sidcup GP, and Sandra Ash of Keep Our St Helier Hospital (KOSHH), we learned that attempts to close St Helier were just the first step in the closure of acute and other facilities across South London (including Croydon University Hospital where a new Chief Executive, Matthew Kershaw, may have been brought in to achieve this) and across the country as part of a fattening up process. This was made possible by the Health and Social Care Act 2012  which freed the government from statutory responsibility for providing a universal NHS care and by continued under-funding that is intended, in part, to weaken public support for the NHS by generating more, high profile failures.

The meeting was attended by Joy Prince and Patsy Cummings, two of our most progressive Labour councillors in Croydon, but the absence of other Labour councillors and our two Croydon Labour MPs, Steve Reed and Sarah Jones, was criticised from the floor of the meeting. Are our local Labour politicians unaware that Croydon TUC holds open meetings every second Thursday of the month at Ruskin House and has done so for many years? Is their unfamiliarity with how the Labour Movement functions and the nature of the relationship between the trade unions and the Labour Party an excuse for their dismal absence? We think not.

Earlier this week Chris Williamson MP, the campaigning Labour MP and Corbyn supporter, addressed another public meeting at Ruskin House. Its aim was to call for more democracy in the Labour Party. This is an internal matter for that party and not a matter into which we wish to intrude, but we do very much agree with the basic principles that Mr Williamson was expounding:

  •  MPs and councillors are responsible to, and accountable to, the parties that select and nominate them (OK, Tories are an exception), not to an amorphous electorate that voted for them on the basis of their party affiliation; and
  • being an MP or councillor is not a job for life and should not be treated by those fortunate enough to be selected and elected as a career.

As communists, we would, however, go much further than Mr Williamson and seek to establish real democracy, not the present sham of voting every four or five years to determine which members of the ruling class are to administer their system in our name. A Corbyn administration would be very welcome and might just be able to halt the dismantling of the NHS (if the Parliamentary Labour Party allows it to), but we need real, direct democracy where our votes and our views have continuing significance between elections.