By Sophie Squire
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Autumn statement: why should we pay when we can take money off the rich?

This article is over 1 years, 3 months old
Cuts to arms spending and taxes on the rich can raise far more than the £40 billion the Tories want to squeeze out of us
Issue 2831
Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt sit at a table in Downing Street the week before the autumn statement

Jeremy Hunt and Rishi Sunak plan how they’ll make us pay in the autumn statement

Tory chancellor Jeremy Hunt and prime minister Rishi Sunak hope to raise £40 billion by cutting services or raising taxes. They want to find a further £10 billion in surplus to convince the banks and the bosses that their government is a safe pair of hands.

The autumn statement on Thursday of this week says it will deal with a “black hole” in the country’s finances. But this figure is itself a creation of the government.

The Progressive Economy Forum, which campaigns against austerity, said it was the result of government accountancy rules and uncertain forecasts and would disappear—with £14 billion to spare—if calculations were made differently. In any case, there are plenty of ways to raise money without taking more from ordinary people.

Cut military spending

With Britain still eager to pour arms into Ukraine, military spending has increased to £48.6 billion since last year. In September, while Liz Truss was still prime minister, British defence secretary Ben Wallace announced that military spending would double by 2030.

Truss further promised to raise military spending to 3 percent of GDP. While Sunak has not yet vowed to keep those promises, he is under pressure to increase spending on war from all directions.

Nato Secretary-General Jens Stoltenberg praised Sunak last week for increasing the amount of GDP Britain spent on war while he was chancellor. None of this money benefits ordinary people—but it does make the world a more militarised, and more dangerous place.

Why not scrap Trident nuclear missiles and submarines, saving tens of billions of pounds? A cut in the obscene amounts of money funding death and destruction could be funnelled back into public services.

Snatch fossil fuel profits

The accelerating price of oil and gas means energy companies have scooped up mega profits. Taxing these profits properly could raise billions.

When Sunak was still chancellor he announced an energy profits levy in May. This would supposedly put a 25 percent surcharge on their record profits.

But he made sure to litter this levy with a series of loopholes that handed over tax breaks in return for investment. With energy companies using these loopholes the tax is looking to generate only around £5 billion.

Imposing even a modestly effective windfall tax, a tax on unexpectedly large profits, without loopholes could raise tens of billions. And windfall taxes should include other corporations and banks.

Fossil fuel giants Shell and BP have been able to hand over more than £25 billion to their shareholders in the form of dividends. Imposing a further rise in tax on massive dividends could raise more money to help those struggling to pay their energy bills.

Clamp down on tax avoidance

Britain remains by far the world’s greatest enabler of corporate tax avoidance. The government admitted that around £35 billion is lost every year through corporations and individuals not paying taxes.

The true figure is likely to be much higher, with one estimate putting the loss at between £59 billion and £122 billion a year. But even these eye-watering sums are likely underestimates.

All of this is enabled by a system that allows for tax evasion and avoidance. The resources to investigate tax avoidance have been cut to the bone.

The HMRC tax office concluded 437 criminal investigations in 2021 compared to 864 the year before. And last year the government told HMRC that it should plan to cut between 20 and 30 percent of its workforce.

The government also lost billions to fraud carried out by businesses. The government’s Bounce Back Loan scheme handed £47 billion to businesses to help them recover from the pandemic.

The handouts were given out with little investigation into the companies themselves. The National Audit Office estimated that £5 billion of this money was fraudulently claimed. The extent of the fraud caused the Tories’ minister of state for efficiency, Lord Agnew, to resign from his role.

Before resigning he said that the government “appears to have no knowledge or little interest in the consequences of fraud to our economy or our society”. He added, “Arrogance, indolence and ignorance freezes the government machine.”

Make the rich pay

Any tax hikes should be aimed at the rich, not ordinary people. The super rich that have non-domicile status are legally allowed to avoid paying £3.2 billion of their combined £10.9 billion offshore income a year.

These were the findings of a report by the university of Warwick and The Economic and Social Research Council. It found that 26,000 people, granted non-dom tax status, collected an average of £420,000 a year in unreported overseas income.

One of those 26,000 was Sunak’s billionaire wife Akshata Murthy. Last week she received £7 million in dividends for her share in her father’s tech firm Infosys. She won’t have to pay any tax on this sum in Britain.

Britain now has a record high of 177 billionaires with combined wealth of around £653 billion. Why not raise the top rate of income tax? Why not tax gains from shares and profits at the same rate as workers’ incomes?

The Wealth Tax Commission recommended a wealth on individuals at the one-off rate of 5 percent, spread over a period of five years. With an asset threshold of £500,000, some £260 billion could be raised for redistribution. If the threshold was raised to assets over £2 million, it would still raise £80 billion.

Of course one thing the Tories learned lately was that if the rich don’t like what the government is doing, they’ll try and crash the economy. Bosses, bankers and financiers would respond to the measures in this article by pulling out their money, and forcing another run on the pound.

That doesn’t mean doing what they say. But it does mean that, if we want to tax the rich, we have to be prepared to fight them with a movement.

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