The Asda report and the 10p tax scandal

By the Socialist Resistance Steering Committee

Gordon Brown’s ‘U-turn’ on the abolition of the 10p tax threshold still leaves millions of low-paid workers and those on benefits without any compensation for what amounts to a doubling of their income tax.

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The very same day – Monday 21 April – that Gordon Brown was forced into a special meeting with Labour MPs over the decision to abolish the 10p tax rate for the poor, an unlikely source – the supermarket chain Asda (owned by Walmart) – exposed the real economic situation facing the poor.

The Asda survey found the average family is £5 a week worse off than a year ago because of inflation, and that wages have not kept up with inflation. Government figures dispute this, but that is because of the stilted way government figures are worked out.

Official inflation figures include some very expensive items that poor families are unlikely to buy. The biggest rise in inflation has been in basic necessities that the poor spend a large percentage of their income on – like food, fuel, transport and housing. For the low paid and those on benefits the official inflation figure of 2.5% is a joke. Asda reckons it’s more like 5% – at a time when the government has been exerting strong downward pressure on the pay of low-paid public sector workers.

Pay increases, and pension and benefit increases, “in line with inflation” amount to a real cut in disposable income – the poor getting poorer. It is precisely at this time that the government wants to implement the budget’s abolition of the 10p in the pound tax band for the lowest paid.

Gordon Brown’s logic for doing this is clear: they were determined in the run up to a general election to reduce the income tax rate for better off workers and sections of the self employed from 22p in the pound to 20p in the pound. This mainly affects those on incomes of between £19,000 a year and £40,000 a year. This is hardly a fortune, especially for families with children, and no socialist should want to see better off workers – and £19,000 a year is ‘better off’ in a purely comparative sense – disadvantaged.

But of course there was no way that Brown and Chancellor Alasdair Darling were going to increase the taxes of the rich and the super rich, so the worst off have to pay. This is an outrageous scandal, and would have been unbelievable in the eyes of even right-wing Labourites in the 1960s and 70s. A regressive tax reform, taking from the worst off, is a caricature of New Labour’s groveling in front of the rich, a sick joke.

Of course it is widely known that the richest people in Britain pay little or no tax. Philip Green, owner of BHS, Top Shop and many other retail businesses pays nothing – on the spurious grounds that his wife is the real owner and she lives – allegedly – more than 6 months a year in Monaco. Rupert Murdoch’s News International contrives not to pay a penny in taxes in Britain. ‘International treatments’ are always available to those will millions (or billions) in the bank.

Such are the abject depths of New Labour’s capitulation to neoliberalism that once again New Labour allows the Tories to – apparently – outflank it to the left, as David Cameron cries crocodile tears for the poor. As a consequence Labour will get an even bigger drubbing than expected in the May 1st local elections; the way is being prepared for a gigantic Labour collapse in the forthcoming general election. Never was the time to build a left alternative more obvious.

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1 Comment on The Asda report and the 10p tax scandal

  1. Louise Whittle // 24th April 2008 at 1:16 pm // Reply

    Yeah, and what was even freakier, in a sense of alternate universe, is that hammer of the poor, Frank Field led the charge against this regressive step…

    “Never was the time to build a left alternative more obvious”.

    How? Where?

    There was a back bench rebellion by Labour MPs and you can’t collapse the whole of the LP into the NL project. There is a distinct difference and there is the Labour Left and that aspect is missing from your piece.

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