Downloading PDF. Please wait... Issue 2245

The tax system and the social wage

This article is over 13 years, 2 months old
Viv Smith looks at the ideological assault on the welfare state that lies behind George Osborne’s tax changes
Issue 2245

Tory chancellor George Osborne wants to merge National Insurance and income tax into one new tax. He argues this will “simplify” the tax system.

In reality it is part of the Tories’ ideological assault on the welfare state.

It is an attempt to smash the tradition that, in return for our work, the state provides us with a package of services—from the NHS to education and benefits.

All the wealth in society is created by the labour of workers.

Some of it is paid back to us in the form of wages, but the rest goes into the pockets of the rich.

For more than a century workers have fought for some of that wealth to be spent on supporting the poorest.

This came to be called the “social wage”. And the Tories want to break it.

They want us to see services like the NHS as perks provided by the government.

If they can achieve this then they are closer to winning the argument that services can’t be provided for free—and that they need to be profitable.

But National Insurance is a system not of tax, but of contributions—where workers pay “insurance” that is used to pay for services and benefits they may later need.

We pay it from the moment we start work, to fund services and our pensions.

In its current form it goes back to the creation of the welfare state after 1945.

The need for welfare became apparent to the ruling class when it was shocked to find many working class men too malnourished to fight in the Boer War of 1899.

At the same time, the bosses needed workers fit and able to work in the vast factories of British capitalism.

They were also terrified of workers who were beginning to organise and fight back against their exploitation.

It was pressure from below that produced the welfare state after the Second World War.

These reforms were never free—workers, by being denied the full value of their labour, always paid for them.

The Tories want to scrap this as part of reshaping society in the interests of big business.

But there is an alternative.

Workers are not robots that the rich can simply use to make profits.

We can stand together, and resist their drive to destroy our lives and make us pay for a crisis we didn’t create.

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