Pre-budget - the wealthy's Darling

15 October 2007

Alistair Darling's pre-Budget was meant to be part of Labour's electoral arsenal in the run-up to an early general election. But Brown retreated hastily for fear of losing his huge majority in the Commons - if not his flat in Downing Street. As a result, this pre-Budget appears as a crude attempt to entice the rich onto Labour's bandwagon.

In fact, Darling was so determined to ensure that the capitalist class would be pleased with him that he even tried to present the 2% reduction in corporation tax (what the bosses pay on their profits) already announced in Brown's last Budget, in March, as a new giveaway for companies.

Then there is the increase of the threshold above which Inheritance Tax is due. The Tories made a big fuss over it. As it was, however, at £300,000, very few people paid it, even with soaring housing prices, because this tax is not applicable to one's own home. So, the only people concerned by this tax are really the richest.

Likewise for the taxation of financial profits. Darling claims that by introducing a single 18% rate for this tax, he will close loopholes that allow rich speculators to make huge profits out of raiding the assets of ailing companies. Strangely enough, however, he admits that this change will only bring in £300m or so to the government. The reason for that is simple: while some profiteers will see the tax rate on some of their income rise from 10 to 18%, others will see it drop from 40% to 18%, particularly among real estate speculators.

Yet why do these speculators pay less tax on the income they get from playing bingo, than they would if this income came from the labour of their muscles (which would be 40%, since they are all in the top bracket of income tax). Why should the rich pay proportionally less tax that the rest of us?

But while Darling woos property speculators, not one penny will be devoted to providing new state funding to build affordable rented housing for the low-paid! Obviously, the Darlings and the Browns still take the votes of the working class for granted. But one day or another, they will pay for their contempt for working people.