The Communist Party has just published its policy on taxation. Chris Guiton, convenor of CP economics commission, outlines the main principles that guided its development.

The Communist Party’s economics commission has just published a radical, hard-hitting pamphlet on the need for a new taxation system in Britain: From Each According to Their Means: Essential tax reforms for a left progressive programme.
The pamphlet challenges the current neoliberal consensus and offers a comprehensive set of recommendations for moving to a fairer, socialist society.
Dealing with rampant tax evasion and avoidance and the self-evident need for major reform of Britain’s taxation system are critical issues.
But they don’t receive as much attention as they deserve as the three major political parties vie to promote variations on the austerity agenda.
The report offers a class-based analysis of the impact over recent years of the shift from direct to indirect taxation, the reduction in top rates of income tax and corporation tax and the implications of widespread tax evasion.
Britain is an increasingly unequal country. This is not of course solely due to the changes to the tax system begun in 1979 by the Thatcher government and continued under new Labour. It is the political decisions of successive governments that have wrecked the economy and brought us to levels of inequality not seen since Victorian times, including cuts in public services and overall public spending, the assault on trade unions and employment rights, privatisation and the deregulation of the banks.
Taxation policy has played a significant part in bringing us to our current state and it’s abundantly clear that the current tax system in this country is deeply dysfunctional as successive governments shift the tax “burden” from those most able to pay tax to those least able to pay.
Even under capitalism it is possible to devise a tax structure that does not place the entire burden of taxation on ordinary working people and their families, but it requires an unapologetically class-based analysis to do this.
The criteria employed by the economics commission were that taxes should be redistributive, capable of promoting “social justice,” reflective of the ability to pay, simple to understand, predictable, unavoidable, compatible with each other, objective to assess, transparent and free from interference by those hostile to the interests of the working class, including parliamentary lobbyists, senior civil servants and the judiciary.
The new pamphlet — the result of extensive research and analysis — presents detailed proposals, including:
Tackling the estimated £120 billion lost to Britain through tax avoidance and evasion via introduction of a robust, general anti-avoidance rule which actually “does what it says on the tin” and which includes serious financial or other penalties for those found to have broken the law — giving HMRC the resources it needs to do the job properly along with an end to its current big business-friendly mode of operation; and radical proposals to clamp down on tax havens and the transnational corporations that use them.

  • Restoration of corporation tax to between 30 per cent and 40 per cent, linked to restoration of a form of advance corporation tax to reduce the incentive for corporations to pursue tax avoidance strategies and windfall taxes on corporations’ recent super-profits.
  • Introduction of new 60 per cent rate of tax for earned income over £60,000 a year, and a 70 per cent rate for unearned income over £60,000 a year.
  • Reintroduction of a state earnings related pension scheme (SERPS), incorporating all private pensions schemes.
  • Innovative proposals for the abolition of all current property taxes and replacement with a land value tax (LVT), with the aim of shifting the burden of taxation away from earned income and reducing the scope for tax evasion. This would return to society the value of land that society itself creates and help tackle the evident social injustice generated by the concentration of land ownership in the hands of a small elite.
  • Tackling the growing gap between rich and poor with the introduction of an annual wealth tax of 2 per cent and higher rates for the “mega rich,” ending “non-resident” and “non-domiciled” exemption from British income and wealth taxes; and steps to prevent capital flight by implementation of robust exchange controls.
  • Reforming current environmental taxation — which has an important role to play in changing behaviour as well as raising revenue, with the aim of promoting sustainable economic development — by moving to a “tax-and-dividend” approach for addressing the problem of global warming — with Britain acting unilaterally, if necessary, by way of example, with the introduction of standardised carbon tariffs on imports.
  • Support for a financial transaction tax (Tobin tax) on trade in currencies to give Britain greater control of its economic policy and introduction of a financial activities tax (a levy on banks’ profits and remuneration packages).

Underpinning Communist Party calls for a federal Britain with reforms to the current system of direct and indirect taxation, retaining some taxes at federal level to fund redistribution between different parts of the country and shifting others to national level, to provide a major part of the revenue needed to provide public services and the tax base required to sustain public-sector borrowing for investment purposes as determined by national parliaments, linked to calculation of the redistributive element within the block grant on the basis of social need.

As the late Ken Gill said: “You pay tax and you buy civilisation.” This is a crucial point. Most people understand that taxes are a price we pay for a decent society. Some campaigning organisations are already doing good work in this area.
As we approach the 2015 general election and the political debate sharpens, the aim is to stimulate discussion in the trade union and labour movement about the critical role progressive taxation plays in tackling growing inequality, funding public services and making the broader case for a genuinely socialist alternative economic programme.

Copies of the new Communist Party pamphlet: From Each According to Their Means – Essential tax reforms for a left progressive programme are available from the Communist party shop or from Communist Party, Ruskin House, 23 Coombe Road, Croydon CR0 1BD or (020) 8686-1659.