1990s >> 1998 >> no-1128-august-1998


Taxing problem

Dear Editors,
I’d like to point out what I think is a mistake itt the Socialist Party’s thinking on tax – that workers don’t t really pay tax because they can’t afford to, and that it’s always a tax on profits. The poll tax fell most heavily on the poorest people and was not passed on to capitalists in paying higher wages – certainly not for unwaged people. The workers pay a lot of tax in VAT on fuel, electrical goods, taxes on cigarettes and alcohol. The council tax is much more of a burden to poorer people too. It got left to anarchists and Leninists to oppose the poll tax and these people are not known for believing in fairness and justice.

Reply: Actually, we don’t deny that workers pay, in the sense of themselves handing over the money, some taxes. Our argument is that the burden of taxation does not fall in the end on the working class but on the propertied class and profits.

This is based ott the assumption that in the medium term workers sell their ability to work at its cost of production (or what Marx called its value), i.e. at the cost of what they must buy to keep their skills up to scratch and also to raise a family to take their place on the labour market when they retire. It follows from this that any permanent increase in the workers’ cost of living, whether from taxes or from higher prices will be passed on to employers as higher money wages and salaries (On the other hand, any permanent decrease in their cost of living, as from rent control or from subsidies to food or transport, will end up being a subsidy to employers in the form of lower than otherwise money wages.)

Having said this, most taxes in Britain are not even paid by workers but are collected and paid by businesses. Obviously, this is the case with corporation tax. It is also the case with income tax on wages and salaries, which is deducted by employers from nominal wages under the PAYE system and never even get into the hands of bank accounts of employees (income tax, in fact, is mainly a means of ensuring that workers without families don’t get that part of wages meant for raising a family)

Perhaps less obviously, this also applies to VAT. It too falls on and is collected by businesses. As its name implies it is a tax on “value added” which, in capitalist economics, translates into a business’s wages bill plus its profits. As we have just seen, wages in the medium term represent the cost of production of labour power, so though the amount of VAT payable is calculated on the amount of “value added” in fact just like corporation tax it only comes out of profits. Firms can’t automatically increase their prices by the amount of the tax; they reduce their profits by it.

Excise duties on beer, spirits and tobacco are also paid out of their profits by the firms involved. Only in this case prices are raised. The government in effect creates an artificial monopoly position allowing monopoly prices to be charged – and then taxes away the monopoly profits for its own benefit. lnsofar as these goods, selling at their monopoly prices, enter into the general cost of living of the working class they are reflected in higher wage levels.

The taxes workers actually pay out of their own pockets are such things as car licences, TV licences and, if they are owner occupiers, council tax – but, once again, in so far as these enter into the general cost of living they are reflected in wage levels.

As regards the poll tax, the Thatcher government clearly made a major blunder in imposing a tax which had to be physically paid by every adult. Not only was this not cost-effective in capitalist terms (the extra costs of collecting it) but it led to resentment amongst those who had never paid such taxes and in many cases couldn’t afford to anyway. ln the end a combination of nonpayment, riots, demonstrations and the loss of votes in by-elections, caused the government to back down and restore something akin to the old system under which only owner-occupiers paid local taxes.

As to the unwaged, since they depend tor their income mainly on handouts from the state, taxing them does not make much sense from a capitalist point of view – its just takting back part of what’s been handed out, so why hand it out in the first place? This is why the government will he introducing so-called “tax credits”, under which what is to be paid as tax (if anything) is to be set against what is to be paid as benefit and only the difference paid. So, as with PAYE, the poor will never see the taxes they “pay”. Forcing the poor to physically pay a tax like the poll tax doesn’t make sense either as the level of income support (formerly supplementary benefit, formerly national assistance, formerly the poor law) is fixed as the minimum supportable level which in theory can’t be reduced further. If you try, you get riots even in small peaceful towns like Wells and Taunton. – Editors.  

Doom and gloom

Dear Editors,
You have high ideals and good ideas and if these stood a chance of success I would willingly carry on supporting you. However I have come to the conclusion that the human race is a self—destructive organism and incapable of rdemption.

It is all right talking about a moneyless, classless society, but try preaching your ideas to the Taliban eroding the freedoms of the people of Afghanistan; tell it to the Jews and Palestinians battling in the Holylands; tell it to the Muslim and Christian extremists and government forces butchering the peasants of Africa; tell it to the Christian bigots in Ireland murdering their neighbours; tell it to the ruling juntas in Burma and Nigeria slaughtering and jailing their political opponents; tell it to the thugs in Britain who murdered Stephen Lasvrence and tell it to the racist police who could not be bothered to investigate the murder of a young black . .. is there any need to go on?

I’m afraid, my friends, the writing is on the walls of the war-torn villages of Yugoslavia and the Middle East; in the polluted fields and forests of our decaying planet, in the infertile deserts of once productive areas; in the over-fished and unsanitary oceans of the world. Sell your socialist ideas to the corporations and governments plundering the riches of the world, to the logging companies devastating our forests; to the oil and chemical companies spilling irreversible contamination into the atmosphere, soil, and oceans of a fragile ecosystem.

What other species over-breeds, fouIs its nest and slaughters its own and every other species around it? What other species is on an out of control spiral of self-destructive violence and wanton destruction? I see no way of halting this suicidal self-flagellation of our doomed species.

To my mind, your preaching of socialism to the world is in the same category as a doctor dabbing tea tree oil on a casualty who has just had a one-to-one with a combine harvester.

Call me a doom-dealer if you like, but if I were you I would substitute ego for idealism and call upon everyone to enjoy what they had today and forget about the future. Establish a definite scepticism – savour life today, for tomorrow is a dubious dimension.
PHILIP McCORMAC, Hinckley, Leics

Reply: No, if that’s what you really believe, you tell women in Afghanistan yourself that they should enjoy what they have today and forget the future. You tell that as well to the Palestinians being shot at by Jewish settlers, innocent Israelis being bombed by Palestinian terrorists, those oppressed by the governments of Burma and Nigeria, the victims of racist violence in Britain, etc.

Having said this, we would agree that capitalism does appear to be descending into barbarism, at least outside those areas where your philosophy of “eat and be merry for tomorrow we die” has a superficial plausibility. But this is an argument for socialism not against it, making it even more urgent.

We should point out that, although concern for what capitalism is doing to our fellow human beings is partly what motivates us to want socialism, so does “ego”. We want socialism because it will improve our lives. We are not idealist do-gooders but have made the hard-nosed assessment that only through co-operation with other fellow humans can a better world be built.

We reject your suggestion because it wouldn’t improve our lives nor, we suspect, yours – Editors.

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