The Only Thing Getting Bigger in this Society is Inequality

Before George Osborne’s 2012 budget address, Nick Clegg informed the country that it would be a ‘Robin Hood’ budget, whereby the rich would be taxed to help the poor. If the government were sincere about this pledge and truly wanted to support those who are suffering at this time of austerity, they would have done all they could to reclaim the £25 bn lost annually through tax avoidance and to make sure such abuses could not be repeated. This is an example of one obvious and genuine alternative to the cuts. Greg Philo, director of the Glasgow University Media Unit, pointed out another back in 2010 in an article for the “Guardian”: a wealth tax to raise £800 bn from the £4 trillion held by the richest in our society, something which had strong support amongst the public according to a YouGov poll his team commissioned, showing 74% in favour.

Instead, the budget was a case of Robin Hood in reverse, with the Chancellor encouraging tax avoidance by big business and further lowering corporation tax while implementing even deeper cuts to public spending. The UK was robbed of the income it needs to fund its precious public services while the rich were given more hand outs.

A budget for the poor, jobless and dispossessed is now needed more than ever in this country. The coalition partners know that one million 16 to 24-year-olds are out of work – the highest for 10 years, and higher than the EU average. They know that Britain’s female unemployment rate has hit a 25-year high. And if they listened to the Institute for Fiscal Studies they would know that the biggest losers from the public spending cuts are the poorest 10% of families with children. What they don’t seem to know is the plain truth: austerity may be working for the bosses and the banks, but it isn’t working for Britain.
In the budget, Osborne showed that his true priority is giving succour to multinationals, helping them reduce their tax bills dramatically by enabling their profits from offshore finance company subsidiaries and the besten bitcoin casinos in Deutschland to be tax exempt.

According to Felicity Lawrence, “If a UK-based multinational sets up a treasury company in Switzerland and puts equity into it from the UK, which is then passed on in loans to its other subsidiaries to run its operations, with interest on the loans flowing back in profits to the tax haven. The tax rates on these profits will be a maximum of just one-quarter of the current UK rate.”

The Chancellor’s announcement of these new policies will make tax avoidance much easier for multinational companies and banks. The Treasury itself has admitted these measures will lose the public purse £1 bn each year. Tax expert Richard Murphy described these new measures as a “deliberate promotion of tax haven abuse”.

Enabling tax haven abuse is another anti-democratic measure by this government and one which we can add to a long and growing list. The recent lobbying scandal highlighted how wealthy Tory donors buy power and influence. Now we see how Britain’s tax rules are being written by tax-dodging big businesses and banks like Vodafone and Barclays, who sit on exclusive corporate working groups at the heart of government, crafting policies entirely for their own benefit.

In a pitiable attempt to appease the wave of public anger over tax avoidance by mega-rich individuals and opulent corporations, George Osborne announced that the government would take steps to implement a General Anti-Avoidance Rule, including a consultation document to be issued this summer. However, this amounts to very little given the scale of the problem, which the government only seems intent on worsening.

The government’s much-derided and parodied slogan “we’re all in this together” sounds all the more absurd if you consider how levels of inequality have grown over recent years. In the UK, the thousand richest people have accumulated fortunes that are collectively worth £250 bn more than a decade ago, with giant corporations sitting on near-record levels of cash. For example, in the UK, as Stewart Lansley has pointed out, “corporate surpluses stand at over £60 bn, around 5% of the size of the economy”. This is money which could be used to kickstart the economy yet is instead mostly standing idle, resulting, for Lansley, in ‘paralysis’. The regressive reductions in the top rate of income tax (to 45%) and in corporation tax (to 24%) show that this government is extremely comfortable with the wealthy getting wealthier whilst the dole queues grow.

All this means we should not be fooled for a moment into thinking that George Osborne is Robin Hood when we all know that he is really the Sheriff of Nottingham. This country is not broke, and there are clear alternatives to austerity, alternatives which are being purposely ignored by the political elite. We only have to look at the profits and bonuses of banks and big business to know that.

Take Amazon.co.uk for example. Last month the Guardian revealed that Amazon’s British operation made £3.3 bn in sales last year but paid not a penny in corporation tax on any of the profits from that income. The company is now under investigation by the tax authorities, according to media reports.

What is broken, and destructive, is a political and economic system which claims to promote the ‘big society’ but where the only things getting bigger are unemployment, inequality and anger.

By Tim Matthews of UK Uncut