As outlined by Adam Price MP Plaid's economic strategy for rebuilding Wales is based on massive tax breaks to multinational coporations in order to attract foreign companies into Wales. Corporate globalisation means that multinationals race around the world looking for whichever country offers the lowest paid workers with worst conditions, Plaid's economic strategy can only mean the continuation of the low wage economy.
Adam Johannes from Roath RESPECT outlines a socialist alternative.
Once upon a time, sections of the Labour Party spoke of 'taxing the rich until the pips squeaked', of 'howls of anguish from those rich enough to pay over 75% on their last slice of earnings' - but that was a very long time ago! Since 1979, the burden of taxation has shifted decisively from the rich to poor. RESPECT believes that we need to tax the rich to rebuild the Welfare State: Join our fight to make the rich pay their fair share as part of the bigger crusade to combat poverty and inequality in Wales!
Shift in tax
There been a fundamental shift in tax in Britain over the last 30 years. The Tories and now New Labour have increased increased indirect taxes that hit the poor the hardest. When Thatcher's Tory government was elected in 1979 one of its first acts was to slash income tax on the rich and radically increase VAT on consumer goods. It radically cut the top rate of tax on the rich.
At the same time it doubled VAT from 8 percent to 15 percent, forcing up the price of many basic goods.
When the Tories were forced to abandon the poll tax in 1991 they hit back at working people by raising VAT to 17.5 percent. The Tories also introduced the nastiest fuel tax of all. They imposed a special 8 percent VAT tax on domestic fuel in 1994, and planned to increase it further.
The tax added 8 percent to people's gas and electric bills and hit pensioners struggling to keep warm in the winter especially hard. New Labour reduced this tax to 5 percent but refuses to scrap it. Since New Labour was elected in 1997 it has done nothing to change the Tory shift from direct to consumption taxes.
New Labour refuses to increase the top rate of income tax. And it has cut taxes on business profits even more than the Tories did.
There's an urgent need for a fight against the pro-rich, pro-business agenda of Tories, New Labour and Plaid. It should be based not on higher consumption taxes, but on a major increase in income tax on the rich. There should also be a massive increase in tax on corporate profits.
This should go hand-in-hand with price controls on basic goods to stop business protecting their profits by forcing up prices paid by ordinary people.
Let's recap: Under the first 8 years of the Thatcher government, the richest paid a rate of 60% on excess earnings, under New Labour this has sunk to 40%. Under James Callaghan the rich paid over 80% and under Harold Wilson almost 90%. If the government were to tax the rich at the same rate as Thatcher - hardly a socialist! - we could scrap student fees, rebuild the NHS, keep our schools open and provide for our pensioners. Instead New Labour have cut corpoaration tax again to the lowest rates of any major economy, lower than America, Germany and Japan. Incredibly, Plaid Cymru argue that corporation tax should be cut even further! In Wales, in contrast, RESPECT argues that we need to take on corporate power not extend it.
Scrap Council Tax - For a Local Service Tax
The policies of the mainstream parties in promoting tax breaks for the rich have mean council tax bills for working people have rocketed. The richest 20% of the Welsh population also pay a lesser proportion of their income on council tax than the poorest 20%. Council Tax is obscenely regressive. Other parties moan about the Council Tax: we demand its abolition. A local service tax based on income could actually generate more money than the current council tax!
Cardiff RESPECT will be campaigning in May for the scrapping of the council tax in Wales. We wish to see it replaced with a local service tax based on income. Under our scheme three quarters of people would be better off, while the rich would have to pay more. Low income houses would save more than £20 a week. We would campaign for those whose income was below £10,000 a year to be exempt from the tax.
To spread this system fairly across Britain you would have to continue redistributing wealth from councils in richer areas to those in poorer areas. Otherwise in areas where there were fewer people with high incomes, there would be less money to spend on services, or workers would have to pay more.
'The language of priorities' . . .
Aneurin Bevan called socialism, 'the language of priorities'. If this is the case, then the priorities of the two ruling parties in Wales are very far from socialism.
New Labour, Plaid Cymru, the Tories and LibDems have supported over £14 billion being spent on war in the shape of a huge, privatised, UK Military Academy at St Athan's. This money could have been spent on eliminating child poverty, on keeping schools and hospitals open, on creating jobs based on renewable energy and socially useful activities. Instead, New Labour and Plaid showed that while we are told that there is no money for vital public services, there will always be money to fuel the military-industrial complex.
Cardiff RESPECT is proud to stand against the tide of militarism and to have been the only party in Wales to have campaigned against the school for slaughter in the recent assembly elections. We believe that there is enough money in Wales to create a very different society, the problem is that it is concentrated in the hands of the few. We aim to build a party of the millions rather than the millionaires to build a society based on principles of equality, social justice, peace and sustainability. To get involved email: email@example.com
ANOTHER WALES IS POSSIBLE!
Cardiff RESPECT calls for
* A massive cut in military spending. Disband Britain’s weapons of mass destruction and scrap nuclear weapons. Decommission Trident. No to £14 billion being wasted on a military academy at St Athan's in South Wales.
* Transfer resources from military to useful production.
* Tax currency speculation.
* Abolish VAT and replace it with increased direct taxation.
* Raise the top rate of income tax.
* Raise the tax threshold to ensure that no one on the minimum wage pays income tax.
* A big increase in corporation tax, with an additional tax on the super-profits of the oil companies and the banks.
* A turnover tax on multi-nationals doing businesses in Britain.
* Raise the top rate of inheritance tax whilst putting higher duties on other transfers of wealth and financial transaction.
* Increased stamp duty on stocks and shares.
* A crack down on tax evasion by big companies and action against offshore tax havens.
* Abolish the ceiling on National Insurance contributions.