ConDem 'Emergency Budget'
A sympathetic noose: Gideon shows his colours
The ConDem government claims to be ‘progressive’. It is nothing of the kind. Led by three public school boys in Cameron, Clegg and Osborne, this is rule by bankers and the rich in the interests of bankers and the rich. Gideon Osborne, the 18th baronet of Ballentaylor (old Anglo-Irish aristocracy), has unveiled an ‘emergency budget’ that strangles the poor while delivering handouts to the rich.
This budget is sprinkled with minor measures that seem to help the poorest. State pensions are to be linked to earnings or rise by 2.5%. This is welcome but goes nowhere near addressing the poverty that pensioners are in after more than 20 years of pensions getting smaller. Those earning under £7,475 per year will now be exempt from income tax.
The only way that these can be considered ‘progressive’ is by reference to the appalling record of New Labour in tackling poverty while in government.
The reality of this budget for working people is that we will be expected to pay for the bailout of the banks. VAT is to rise to 20% - this is regressive taxation as it will affect everyone regardless of income so hits the poor hardest. It is the taxation model of the poll tax. This rise alone will wipe out any gains in state pensions.
Public sector workers are to suffer a pay freeze for two years, when most are already underpaid. For those earning under £21,000, there will be a flat £250 pay rise (again this does not cover the rise in VAT alone). There will be 25% cuts in most government departments, which signal more job losses, so raising the welfare needs in society.
While we suffer a housing crisis, the ConDems will not help. Instead, Gideon the aristocrat will put a cap on housing benefit with no recognition that the lack of council houses is the factor pushing private sector rents up and raising the cost of housing benefit. Child benefit is to be frozen for three years in a country with the highest level of child poverty in Europe. The general linking of benefits to the Consumer Prices Index is designed to stop benefit rises so contributing the extending poverty in Britain.
Paying the hangman
While there are cuts for the poor, the rich are given even more tax breaks. Capital Gains Tax is an instrument for taxing wealth which is created when selling stocks, bonds or property. It taxes speculators. Yet the ConDems have decided to increase the loophole that allows the rich to only pay 10% on the first £5 million. Before 1998, it was normal to pay 40%, the same rate as income tax for the rich at the time.
Corporation Tax is a tax on profits, which have risen for the richest in the recession. The banks were recording multi billion pound profits even as they demanded bailouts. New Labour started cutting this tax for the rich and the ConDems have gone further reducing it to 24% over the next four years.
The Chancellor has proposed a banking levy from January 2011 but this will only be £2 billion and it is unclear whether it will be a ‘one-off’ levy. When set against the banking bailout, it is ridiculously small and ineffectual. The National Audit Office puts the actual cost at £850 billion, including £76billion given to Royal Bank of Scotland and Lloyds to buy their worthless shares, £200 billion to increase credit (a measure that failed), £250 billion to guarantee bank borrowing, £40 billion in loans to failing banks and £280 billion to insure banking debt (which could be as high as £2 trillion).
This is a budget that cuts the services, jobs and pay of the poorest while handing out tax breaks and handshakes to the rich.
The public debt is £903 billion. Most of this is a result of the banking bailout and the increased cost of unemployment to the state. There need to be more jobs not less. Respect would start a programme to convert Britain to environmentally friendly power with the aim of creating 1 million jobs. It rejects the idea of cutting public sector jobs.
Respect would launch a council house building and renovation programme which would create jobs, homes and relieve the rent burden on housing benefit.
The banks and energy companies are getting away with huge rip-offs. Respect would raise Corporation Tax back to 30%. This would bring in over £6 billion per year - enough to double spending on higher education. This money could scrap tuition fees and introduce universal student grants. And a 'Robin Hood tax' of 0.5% on financial dealings in the City would bring in an estimated £250 billion. Respect would also clamp down on tax evasion by the richest, which cost the UK more than £100 billion per year. And if there must be cuts we would start by cancelling Trident and ending our costly wars abroad.
There is no need to cut public services or benefits. There is no need to tax the poor.
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