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

EU REALITY CHECK

The events in Greece this week will have come as a reality check to the diminishing number of people on the Left who still cling to the belief that the EU is anything other than government by the bankocracy on behalf of Big Capital. The irrelevance of the forthcoming Greek Referendum demonstrates that popular democracy is meaningless within this capitalist superstructure.  The only hope the Greek people have of avoiding decades of austerity and forced economic emigration is to free themselves not only from the shackles of the Eurozone but also from the entire neo-liberal  edifice that is the EU. The Greek people are not being offered such an opportunity in their forthcoming referendum, but such an opportunity has been opened for us in Britain by the forthcoming EU referendum. If we too are to avoid decades of austerity, we should seize this opportunity. It won’t be easy, not least because by campaigning to leave we on the progressive Left will appear to be on the same side as parts of the Right, some of whom are racist and most of whom will be campaigning on the wrong issues. Rather than making  lack of democracy and workers’ rights the primary issues in the campaign, the Right will be campaigning to leave in order to cut the minimal employment legislation imposed by the EU, to remove the remaining entitlement to UK welfare payments by EU immigrants (or indeed, remove these immigrants physically) and to assert various specious issues of petty nationalism.  In addition, the referendum campaign will be conducted with Cameron claiming to have achieved a number of irrelevant ‘reforms’ designed to appease his critics on the Right and with the pro-EU lobby in a position to outspend the Out Campaign many times over. Furthermore, many on the Left may opt to keep their heads down rather than be associated with the right wing opponents of the EU, opening the way for the mass media, including the already cowed BBC, to report only two views: those of the government to stay in and those of its right wing opposition to leave.

The opportunities that will open up to us if we leave the EU are, however, too valuable to throw away without a fight. These include, amongst others, the opportunity to switch away from a regressive VAT to a progressive Land Value Tax,  the opportunity to slam the door on TTIP currently being negotiated between the USA and the European Commission and, most important of all, the opportunity to begin to regulate, tax and eventually appropriate Big Capital after it has been stripped of the preference and protection that the EU affords it. Leaving the EU won’t guarantee that any of these will come to pass, but if we stay in they will remain  unattainable.

UKIP ANTI-EU CREDENTIALS EXPOSED

A posting by Nigel Green

Writing in this weekend’s Morning Star ( 10/11th May 2014) Natasha Hoarau daughter of the late, great Bob Crow, says that her Dad who did so much exposing the EU empire for what it is – an undemocratic club for big business bosses – “had no time for UKip”.
She points out that while Bob’s union the RMT “campaigned vigorously on the streets for public ownership of our transport networks”, Brussels based Ukip MP’s were demanding that “member states follow EU rail directives imposing privatisation and fragmentation across the EU”.
Natasha emphasizes that Ukip “aims to add to the austerity measures being imposed on us, not fighting against them.”
The BNP and NF are open extreme right neo-fascist racist groups with violent thugs in their membership. These organisations should have no place in any fair – minded society based on peace, justice and equality. However, we are not getting very far if their support simply transfers to Ukip. Although not fascists as such UKip are a hard right, anti-immigrant outfit and as we keeping hearing on the mainstream media, contain large numbers of racist bigots.
They are also rampant neo-liberal free marketeers, who hate the public sector and workers rights. Apart from wanting to dismantle any vestige of public ownership of our transport systems, Ukip would:
• make it easier for employers to fire staff
• cut Statutory Maternity Pay by more than half
• hand over the NHS to private companies, leaving little left other than the NHS logo
• introduce a flat rate of tax for everyone, which would hurt the poorest much more
• scrap rules which prevent corporate tax avoidance
• scrap the legal right to four weeks paid holidays, statutory sick pay and redundancy pay
(Source: Labour Research May 2014)

The Communist Party says these measures will be catastrophic for working people, men and women alike, and completely opposes every one of them.
The Party welcomes the launch of the ‘No to EU, yes to Workers rights’ platform this week, who are standing in the Euro-elections on 22 May. ‘No 2 EU’ includes Communists on the slate. So if you want Britain to leave the EU, but in conditions that favour working people and public ownership, and in conditions favouring a socialist non-racist exit, then vote for ‘No 2 EU’.
I am especially pleased to report that In London, Natasha Hoarau is standing on the ‘No 2 EU’ slate in place of her father. So good luck to Natasha and all ‘No 2 EU’ candidates.

Nigel Green