With the budget looming, bourgeois commentators are getting excited about the apparent spat developing between the Tories and the LibDems over the prospect of a mansion tax or a ‘tycoon’ tax, and a trade-off between the introduction of one of these options and the removal of the 50% tax rate on income above £150,000. Both mansion and tycoon tax proposals are fundamentally flawed and limited in scope, and the suggestion that tax be reduced for the wealthiest is an insult. And all this while the banks continue to pay out unfeasibly large bonuses, Barclays being only the latest, benefits are slashed and real wages continue to fall.
It’s abundantly clear that the Government will do their utmost to avoid upsetting their friends in the City. Treasury steps to close one or two limited tax loopholes will have been choreographed with the banks and are, anyway, no substitute for robust action on a broad front, such as a general tax anti-avoidance rule. In the meantime, wealthy individuals and big business will continue to pay tax on a largely voluntary basis, while people on PAYE have no option but to pay tax, VAT is inescapable and low-hanging fruit such as small businesses will continue to be targeted by HMRC .
With the Labour leadership clearly signed up to the neo-liberal agenda, social democracy in Britain is a busted flush. But it would be interesting to see whether a broad coalition of forces on the left could be developed in support of the establishment of a ‘Fair Tax Commission’ to examine the legitimacy of a more progressive tax system which shifts the focus to taxation of wealth, land and the grossly over-inflated incomes which have become the hallmark of 21st-century capitalism. And which considers serious steps to tackle the tax avoidance and evasion which is estimated to cost the exchequer more than £100bn every year.
Richard Murphy, a tax expert, is doing some quite interesting work in this area. It’s worth checking out his blog: http://www.taxresearch.org.uk/Blog/