Rates and Taxes. Do They Fall upon the Working Class?

The Importance of the Subject
This is a question often raised, but seldom drawing a correct answer. It is, however, very important for the working class to be clear about it, otherwise they may be led to act against their real interests.

During municipal elections, for instance, the Progressives, Moderates, and “Labour” candidates stand for “lower rates,” and tell the workers that this will benefit them, while in Parliamentary elections the Free Traders predict an awful future for the toilers, should the Tariff Reformers succeed in placing a tariff on imports. Thus the impression is created that the workers pay the rates and taxes, and that a reduction or an increase will affect them.

The Socialist, however, ignores these superficial but plausible theories and examines the facts of the case.

Rates and taxes are imposed to cover the cost of local and national government. The employing class, —the possessors of property,—in order to maintain their existence as a ruling class, must pay the various charges incurred by employing an army, navy, and police force. The ever-growing body of officials they appoint the numerous departments they have to run to make smooth the working of capitalist commerce ; the interest on their “National” Debt heaped up by the cost of past wars : all these have to be paid, and the problem ever facing our masters is—which section of the propertied class is to provide the money ?

The amount of taxation has risen by leaps and bounds, until to-day the Budget alone accounts for two hundred million pounds !

The employing, or capitalist, class, though face to face with the workers they are as one, are composed of many sections, differing in their day-to-day interests.

Right through the history of taxation the spectacle has been seen of one section of the propertied class trying to shift “the burden of taxation” on to another class, and the question in many minds is : Can they shift it on to the working class ?

We answer, no ! The working class do not own property. They exist alone by selling their energy (their power to labour) to the employing class, the owners of the means of production.

Why Rates and Taxes are Levied
The employers take the whole of the wealth produced by the working class, merely giving back to the workers on an average, enough to maintain them in a condition to producing wealth.

This portion which is given to workers—when their masters find it profitable to employ them—is like the fuel put into the furnace of an engine’s boiler, or the food given to the horse. It is the indispensable material without which they cannot be kept working.

Clearly, then, the expense of carrying on their Government must be borne by our masters themselves.

The workers’ income on the average is but little more than a pound a week per family, as shown by the inquiries of Booth, Rowntree, and other authorities. Obviously, then, they have no margin left out of which to pay the rates and taxes.

The master class—the owners of the land, factories, railways, etc.—have left for themselves more than two-thirds of the total wealth produced, and these huge spoils, therefore, form the fund out of which they must pay for the upkeep of this system.

These spoils are divided amongst the various sections of the ruling class—the landlords, the financiers, the brewers and distillers, the manufacturers of goods for the “home” market and for abroad.

That section of them controlling the political machine seek to raise revenue from the other sections. Thus to-day the Liberals, faced with the need for more ships and armaments to retain and extend their territory and increase the market for their goods, have turned to the owners of real estate (land) for a contribution towards the cost of government.

The brewers and publicans, too, form a favourite source of revenue ; but, in the long run, every section of the employing class has to bear part of the expense incurred in arranging the robbery of the working class.

An Explanation Wanted
Just as a body of brigands makes its members yield part of their booty to cover the cost of the weapons, ets., they use, so our masters have to pay for the institutions and forces they employ to keep the workers in subjection.

Those who believe that the working class pay all rates and taxes must explain why various sections of the capitalist class organise powerful societies to resist taxation.

Why did the landowners pour thousands of pounds into such bodies as the Budget Protest League and other tax-resisting organisations ? The claim of the Free Trader and “Labour” politician, that the consumer always pays the tax, is seen to be false, for if the owners could simply raise prices, they would not spend time and money in fighting the tax.

Exactly the same thing happens wherever any kind of “indirect” taxation is imposed. The brewers and distillers, tobacco manufacturers, tea, sugar, and flour merchants, have all risen in revolt against taxation, and have used a great deal of their profits in organising resistance to it. Those who think that the workers pay the rates and taxes betray a supreme ignorance of the determining factor in the prices of commodities. What is this determining factor?

What Determines Prices
The price of an article is immediately regulated by the demand for it and the supply available. But these ups and downs are but the result of the higgling of the market, and the price always hovers round a certain centre. How is this basic price, this mean of the fluctuations, fixed ?

The answer is, by the amount of human energy needed to produce the articles under modern methods. Prices change, they rise and fall without relation to taxation.

We are often met by questions like the following. “Did not the price of sugar rise owing to an increased tax upon it ?”

As a matter of simple fact the rise in prices, and also their fall, are to be explained upon every other ground but that of changing taxes. Questions like the above presuppose that the capitalists can charge what they like, but actually they are governed by economic laws just like any other section of society. The sugar tax is a case in point. In 1908 the tax on sugar was reduced from 4s. 2d. per cwt. to 1s. 10d. Did the price of sugar fall ? It rose as much as ½d. per lb. almost immediately. Even our befogging Liberal Party had to admit this, for Arthur Sherwell, M.P., comments on it in his “Four Years of Liberalism.”

1902 Sir Michael Hicks Beach imposed a tax of 1s. per quarter on wheat, but instead of the price of bread rising generally, a rise was the exception. The Budget of 1909 provided a good instance of the truth of our view. At first the brewers and publicans relied upon the campaign of the Licensed Victuallers Protection Association, who bitterly denounced the taxes. When that failed to achieve their purpose, flaring posters annouroed to the working man that “Your beer will cost you more.” A thinking worker might well ask himself the question : “Why do they fight the proposed tax if it is merely a matter of shifting it on to the working-man consumer by raising the price ?” And as that very agitation showed, they merely use the increased taxation as a pretext for getting an increased price.

Rates are Levied on Property
With all “indirect” taxation you find the same feature. The brewers and publicans, like all other capitalists, get as much as the market will bear. When additional taxation is levied they use that to test the market. When they found that the working class could not really afford to pay the taxes, or, in other words, the demand for liquor dropped, they went back to the old prices—a practical proof of the Socialist theory. With tobacco the same thing exists. Many firms, such as Wills, announced that despite the Budget tobacco duties, their prices would remain,the same. With some brands of proprietary articles, of course, prices have risen for the Budget happened to afford a fine excuse for raising their prices.

But in the tobacco trade, as in many another, the widespread and increasing combination, among the manufacturers is the chief reason why they are able to maintain increased pnces.

For competition provides a foil against monopoly prices, but even combinations and trusts have to beware of driving the consumers to substitutes for their goods.

Combination is a far more effective factor in influencing prices than is taxation, but the worker must always remember that prices in general are determined by the labour at present needed to produce articles, and that even the changes caused by trusts and combinations are alone explained by the Marxian labour theory of value.

With rates the same holds good. Rates are levied on properly and have to be paid by those who own it. The truth of this is shown by ihe fact that those who cry out for “lower rates” are the propertied class. Hence place-hunting candidates in municipal contests court the votes of property by swearing to “save the rates.”

Who is it belongs to the local Ratepayers’ Associations ? Workinguien ? No, property owners to a man—though, of course, they inculcate the idea that the workers pay the rates for the purpose of getting the toilers to fight their battles for them, Under the false notion of having a common interest in “saving the rates” many a toiler has been decoyed into his master’s fold. Our Tory, Liberal, and “Labour” enemies are always saying that lower rates mean lower rents and vice versa. Really, practically the opposite is the case, For rents are determined from day to day by the demand for accommodation in a district and the amount available.

When a landowner has houses erected in a locality, the motive actuating the purchaser of those houses would be, what are the chances of letting ? The rents of the houses are not influenced by the rates because, however high the rates may be, the rents cannot be raised if there is a small demand for accommodation there. If the rents are, raised, it is because the increasing demand there enables a higher rent to be charged, whatever the rates may be.

It is true, of course, that here and there you find a district where it is the custom for the tenants to arrange to pay the rates. But this is only a matter of convenience, for the rents and rates together approximate to the usual inclusive rental for such accommdation.

Even in these cases the opposite of what is generally believed happens. For where the rates are low the demand for houses increases, and with the increasing demand the rents rise, and thus cancel what is saved in the lower rates.

Hence we see that in every case the demand for and the supply of house-room, and not rates, determines rentals.

Instance after instance can be cited, such as West Ham and Poplar, where you have rising rates and falling rents.

In fact, the rise of the former helps the fall of the latter. The high rates there cause the large firms, etc., to seek fresh quarters, and the resulting slump in property causes lower rents.

Thus our view is amply demonstrated by the facts of the case. But let us quote an admission by our Free Trade opponents. Radical Reynolds in a leader on the subject, says :

“Every reduction in rates which is brought about by grants in aid from the National Exchequer or by transferring burdens from the local to the national authority, ultimately goes into the pockets of the landlords. Rents rise in proportion as rates are reduced by such means. Where rates are small the tenant can afford to pay a higher rent.”—(July 10, 1910.)

The working class, therefore, should not waste their time seeking lower rates and taxes. The question for them is : “How long shall the slavery and robbery of our class continue ?”

Let our masters settle amongst themselves their quarrel about the expenses of the robbery. The working-class mission is to stop the robbery and to do that they must unite with the Socialist Party of Great Britain. Its object is Socialism, and its method is revolution.

A. KOHN

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