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Saturday 20th
posted by Morning Star in Features

Fair ways to balance the books can be found. BERNIE EVANS suggests a few ideas for Ed Miliband that will be popular and fill Treasury coffers

With Ed Miliband now committing a Labour government to continue the austerity programme into the next Parliament, albeit on a slower scale than the Tories, now is the time for some proposals to be considered to make that awful prospect less harmful. 

By the way a warning: anyone who thinks that 10 directors of the failing taxpayer-owned bank RBS should be paid £5.5 million this year in allowances, or the CEO of Easyjet deserves £7m, look away now. 

How can it be sensible to have a situation where taxpayers subsidise the low wages paid by tax-avoiding firms, thereby creating a deficit, which entails job and welfare cuts? 

Furthermore, as Steven Walker informs us, there is plenty of evidence suggesting the strong links between inequality and growth (Morning Star, December 15). In fact, the OECD has stated that inequality actually “hinders growth.” 

It is well documented how George Osborne, in his Autumn Statement, had to confess to the existence of much lower tax receipts. The Office for Budget Responsibility estimates that the total collected by the end of the 2014-5 financial year will be £646bn — £54bn less than Osborne predicted. 

The amount of income tax being collected is below the government’s expectations because so many working people are earning so little, and pay very little direct taxation. 

Another reason is that so much tax is avoided by rich individuals and businesses paying unscrupulous accountants to use the latest loopholes to divert their money from its rightful destination at the Treasury.

If companies simply refuse to accept their responsibilities to the countries where they do their business and make their profit, the government has to resort to more extreme measures. 

If businesses refuse to pay the correct amount of corporation tax out of their profits, the money has to be paid before it reaches their bank accounts. 

The method is simple — raise the minimum wage to £8 an hour or more, with immediate effect, rising further if corporation tax continues to be avoided, and collect the tax as income tax from the workers. 


That way much less tax is avoided, and furthermore, the workers will no longer require state subsidies in the way of tax credits and housing benefit, so government expenditure can be reduced. 

What is really important, of course, is that such a boost in pay would increase demand for goods and thereby stimulate the economy. 

Companies with very small profit margins and few staff could apply for exemption, but the multinationals and such like could face massive fines if they failed to comply. 

The role of trade unions would be enhanced by the need to ensure the new rates were being paid to all staff. At the top end, the so-called “Laffer Curve” — which, crudely put,  claims tax returns fall as tax rates increase — has been well and truly debunked by the economist Thomas Piketty, so there is no reason not to raise income tax rates for the obscenely rich to 60-70 per cent for incomes over £200,000 per annum. 

A top rate of 60 per cent existed for most of Thatcher’s time as PM.

Profiteering private landlords would see, with wages rising, opportunities to add to their vast wealth and increase rent, so that would have to be prevented. 

Setting up an Ofsted-type government agency to inspect and grade all rented properties so that the rent charged would have to be within set limits, would be vital if the current levels of tenant exploitation are to be decreased.

The mansion tax idea must not be dropped, whatever the “cash-poor” millionaires might say. 

Stressing how anyone connected with tax-avoidance schemes in any way will never be awarded or allowed to keep their honours by a Labour government can only benefit the Treasury.

At the moment Labour plans to raise the minimum wage to £8 by 2020. 

This is unsatisfactory both electorally and economically. Yet again bolder policies are the only answer if the electorate are to be won over. 

Tinkering is no longer an option when the country cries out for transformation.