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

 

 

 

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!

TUC Congress 2016

Largely ignored by the capitalist press and the BBC, who have again declined to reinstate their live coverage of the event, the annual TUC Congress is taking place this week in Brighton. Despite these efforts to discourage public attention, Congress is particularly significant this year as the government struggles to implement the EU referendum decision and while the Parliamentary Labour Party struggles to sustain its self-appointed role as Tory Lite, contrary to the wishes of its elected (soon to be re-elected?) leader. Fortunately, the CP has no such internal conflicts and, as ever, will be in attendance at Congress, distributing each day Unity, our well received briefing for Congress delegates.

One of the most significant issues facing Congress is reflected in Motion 17 and its amendments, grouped together under the heading Protecting worker and trade union rights in the EU Brexit as Composite 7  The composite resolution calls on unions to ‘oppose any assault on the rights of workers arising from the decision to leave the EU. Our rights as workers continue to be among the most restricted in Europe and any further restrictions through Brexit negotiations would be totally unacceptable. The resolution calls for the trade unions to be recognised as key stakeholders in the Brexit negotiations and for

  • a campaign to ensure that the UK government does not repeal any current rights guaranteed by the EU;
  • the rights of existing EU workers to remain in the UK to be protected; and.
  • the IER Manifesto for Labour Law to be promoted.

The CP welcomes these proposals which we anticipate will be adopted by Congress and thus become official TUC policy. In this event, at the local level we will be asking Croydon TUC to acquire, study and seek to implement the IER Manifesto locally. I will report back on the outcome of this initiative..

Follow the Cuban Model

In the posting last week I suggested that resistance to antibiotics should be added to the threats facing humanity. This has been confirmed by the Final Report to government from the Review on Antimicrobial Resistance (AMR) published today. In the preface to this report, Lord O’Neill, now a government minister, accepts that routine surgeries and minor infections will become life-threatening once again and that the hard won victories against infectious diseases of the last fifty [surely sixty plus] years will be jeopardized. Unless action is taken, the report concludes, the number of deaths each year from AMR could balloon to 10 million, at a cumulative cost to global economic output of $100 trillion. On this basis, by 2050, the death toll could be a staggering one person every three seconds and each person in the world today will be more than $10,000 per annum worse off – quite a problem when the world average income is currently less than $18,000 per annum – but such distributional matters tend not to concern Tory ministers.

Some of the report’s recommendations are obvious, including restricting doctors from prescribing antibiotics until they have confirmed with tests that they are actually required. Others are conspicuous by their absence and reflect the prejudices of the government of which Lord O’Neill is a member. These include the need to block TTIP so that US factory farming methods dependent on intensive antibiotic use are not forced on us when this agreement with the  EU is signed. Leaving the EU is the best, possibly only, way of stopping TTIP  – what a shame that the official Brexit Campaign, dominated as it is by right wing Tories, is so reluctant to point this out.

The report concludes that remedial action can be financed from existing NHS budgets. That will generate a huge sigh of relief from a government unwilling to provide an adequate level of funding for even current services. It depends, however, on the assumption that the drug companies can be made to pay. The key recommendation is a new settlement with Big Pharma, a so-called ‘pay and play’ requirement: pay for the investment in new antibiotics and inoculation in exchange for continuing their privileged position as monopoloy suppliers to governments. Given Big Pharma’s record of dodging taxes and ripping off governments, this has all the prospects of a snow ball in hell. The knee jerk reaction from the trade body the Association of the British Pharmaceutical Industry was, as would be expected,  immediate rejection.

Big Pharma is the epitome of capitalism and the illusion that if we give the rich and powerful everything they want, the welfare of everyone else will be enhanced. The truth is that, as with global warming, international, profit driven enterprises cannot be trusted with the fate of humanity. They will always put the interests of the elites who own them or feed off them as managers first. They must be cut down to size, stripped of their monopolies and, in the case of Big Pharma,  replaced with democratically controlled research institutes. If the impoverished Cubans can do it, so can we!

Branch Meeting in April: debate on EU Referendum

The Croydon Branch met at Ruskin House at 7 pm on Thursday, 21 April, our usual third Thursday of the month. The Political Discussion this month centred on the EU Referendum.

Disappointment was expressed at the poor quality of the coverage of the debate in the mass media. This was partly due to the Government’s “project fear” strategy”. This employed the argument that the decision should be based on “facts”, much like its Gradgrindian policy for education. Yet the Government‘s official pamphlet failed the provide any “facts” on Exit despite the cost to taxpayers of £9.3 million, just opinion. The subsequent Treasury report purporting to show, as a ‘fact’, that every household would be £4,500 worse off by 2030 was equally specious. Yet the official Exit campaign could offer little response that was not xenophobic or racist.

In the view of the meeting, the political issues that needed to discussed were

  • The balance of class interests in the UK and the EU and whether these would be improved by Exit.
  • The lack of democracy in the EU.
  • Whether the UK by exiting could ameliorate the consequences of likely future EU collapse, whether triggered by the instability of its external and internal borders or by the inevitable collapse of the Euro.
  • Whether leaving would enable the UK to block TTIP – this question was subsequently answered in the affirmative by Cameron when he persuaded President Obama to say that the UK would ”go to the back of the Queue” (SIC) in any trade negotiations with the USA after we left. TTIP is the only pending negotiation!
  • How best to show solidarity with the workers in the EU, especially those in Greece currently subject to fierce attack and likely soon to endure worse.
  • The consequences of the UK as a whole voting to leave but Scotland voting to stay. Would the breakup of the UK be too high a price for workers in the UK to pay?

Fortunately, branch members on Croydon TUC have succeeded in persuading Croydon TUC to hold a debate in May where these issues will be raised and discussed. Watch this website for more details when known.

The other date to note is the Croydon May Day march on Saturday 30 April. Assemble at noon outside Marks & Spencer, North End for speeches and then a march to Ruskin House led by a pipe band. Comrades were encouraged to attend and help staff the Party stall at Ruskin House afterwards.

The EU Referendum and TTIP

There is a progressive case for voting to leave the EU at the referendum in June and the Communist Party backs it. It relates to recognising what the EU is really about. The treaties creating the Union are bereft of aims to enhance democracy and promote the interests of working people. They are concerned about granting businesses four Fundamental Freedom, the freedom to:

provide services;

establish new businesses;

move capital; and

move labour

within the Union. Nothing of comparable importance attaches to workers’ rights, nor is there much emphasis on improving democracy across and within the EU. In consequence the European Parliament is toothless and is likely to remain so and there is no pressure on national governments to democratise what remains of their powers or to devolve them to local government. Thus the scandal of media ownership, corrupt representative democracy and the absence of workplace democracy in the UK has continued unchallenged and unabated.

In a thoughtful piece by John Hendy QC The terrible tale of the EU and Trade Union Rights   he describes the limited scope of social measures in EU treaties and what little they do for trade unionists in particular and workers in general. The Community Social Charter for the Rights of Workers adopted in 1989 proclaimed, amongst other things, the right to freedom of association, to negotiate and conclude collective agreements, and a right to resort to collective action including the right to strike. Mrs Thatcher duly called it a “Marxist Charter” (as if!) and, after much bitter opposition, it was afforded no more status than that of a “solemn proclamation”. A Social Charter Action Programme was subsequently adopted which led to modest Directives on workplace safety, work equipment, personal protective equipment , VDUs, manual handling, proof of the employment contract, posted workers, pregnant workers, young workers, and working time. The Maastricht Treaty in 1992, gave greater prominence to what was called the Social Chapter to which the UK Tory government promptly secured an opt-out. Amongst other things the Social Chapter provided for European level collective agreements between the “social partners” to be enforced as EU law. In fact very few such agreements have ever been reached because of resistance by employers. By the time Labour was elected and the UK opted back in again only four Directives had been adopted under the Social Chapter: on European Works Councils, parental leave, part-time work and burden of proof. The Treaties underpinning the EU were tweaked by the Amsterdam Treaty in 1997 and the Lisbon Treaty in 2000. As John Hendy concludes, they gave the illusion of a greater social dimension but little of substance.

This is thin gruel for those of us seeking more power and a better deal for ordinary working people. But we are nevertheless confronted with two problems in voting Out at the forthcoming referendum. The first is the right wing element dominating the Out campaign. A more unsavoury bunch than Nigel Farrage, Ian Duncan-Smith and Boris Johnson would be hard to find, and their appeal to latent racism is difficult to stomach. The second is that a vote to leave the EU would probably lead to the break up of Great Britain if, as seems likely, the Scots and possibly the Welsh voted to stay. It would surely have been much better for the referendum to have required unanimity across England, Scotland and Wales and for the referendum in Northern Ireland to have been about whether to remain an appendage of Great Britain (whatever the result of the other referendums) or to join the Republic.

All, however, is not lost for the progressive Out campaign. There is no need yet to throw our lot in with the Corbyn Labour leadership and accept that the potential loss of jobs means that we must stay in the EU and campaign inside it for reform. As appealing as that that may appear to some, it won’t halt the EU’s continuing secret negotiations with the USA over the Transatlantic Trade and Investment (TTIP). The impact of this could be worse that those predicted if we leave. TTIP will cost at least one million UK jobs, undermine our most treasured public services and lead to a ‘race to the bottom’ in food, environmental and labour standards. For the first time, huge US corporations will be able to sue the UK government over democratically enacted laws. A vote to leave the EU should enable us to escape TTIP, although a Tory government might still try to sign the UK (or just England) up to it. With a barrage of scare stories expected such as the headline in the Observer today (“Brexit would spark decade of ‘economic limbo’ claims top Tory”), perhaps the best response would be a slogan along the lines No Vote for In if it means a vote for TTIP. Let the In Campaign chew on that.