Brown's budget won't make the rich pay for their crisis

18 March 2008

No sooner had Brown's Darling announced his budget than the stock market went through its second major hiccup since the beginning of the year. This followed the virtual bankruptcy of one of the largest US banks, the mortgage lender, Bear Sterns.

Back in July last year, Bear Sterns was already the first big bank to suffer from the credit crisis. Since then, its shares fell from a peak of $172 per share to just over $50 last Monday, before finally falling to just $2 per share, this Monday, when it was bought by another bank, with the US government taking responsibility for its debts.

This credit crunch which has been unfolding since the summer last year does not affect only the highest sphere of finance, however. It is already threatening thousands of jobs in banking and insurance industries. Credit has become more expensive for ordinary house-buyers and the tightening up of credit conditions by credit card companies is bound to happen sooner rather than later.

Some "experts" are already talking about a financial meltdown. It's too early to be sure, but there is definitely a risk of that. And it would only make sense that those who are responsible for this mess should be presented with the bill. But none of that was to be found in Brown's budget last week.

Quite the contrary. It is a catalogue of concessions to the wealthy capitalists, big speculators and companies. The windfall tax on utilities which had been announced on the basis of their extraordinary profits, has been shelved. The wealthy executives who use low tax rate countries to conceal their income, will have many official loopholes to allow them to carry on paying low taxes. In fact the only way to pay between 10% and 18% of one's income nowadays is to live on dividends and speculation, because from this year, there is no longer a 10% band of income tax. The poorest will pay more after this budget.

As to tax on profit, it is expected to bring only £52bn to the state this year. But twice that amount has already been paid by the state in one form or another to the finance industry for the bail-out of Northern Rock. If there was any question about who pulls Brown's strings, that says it all.