IL FATTO QUOTIDIANO
Loretta Napoleoni
The great novelty of the election campaign in the United Kingdom is the return of socialist rhetoric to Labour lips. In summary, the message that Jeremy Corbyn sends to the electorate is this: let us redistribute wealth, taking from those in the era of globalization who have become rich, to give to others and thus reducing differences.
Said so is an unbeatable slogan and in fact the campaign of corbyn goes better than expected, in particular its popularity is high among young people. But as everyone knows, behind the slogans are the proposals for real change, which are often less clear than the promises of politicians.
Among the many sectors, Labour promises to nationalize the railways, water and all broadband infrastructure. They also propose financing public sector wage increases, abolishing university fees, and strengthening free health care for the elderly. No one can oppose a social programme like this. To meet the management costs of the return of the state in the economy and in the social one will have to raise taxes. The goal is to increase the government’s tax revenues by about 10 percent.
The key question is, who’s gonna pay? Corbyn has no doubt, will be the new enemy, emerged from the decades of globalization: the super rich, the tax evaders, the bad masters and the great polluters.
So far no one can object to anything, we all want to punish those who get rich behind the nation’s back. The real problem arises at the tax level in identifying these and implementing the tax increase. And let’s see why.
The increase in the tax burden will be concentrated in the productive sector and specifically on the holding company, in other words the new enemy is hiding there. Let us take the financial one: corbyn said that about GBP 8.8 billion more could be extracted from the derivatives and foreign exchange sector. These are among the most productive sectors of the whole industry. In the United Kingdom, however, there is already a 0.5% financial transaction tax on the purchase of securities. This tax in 2017-2018 generated more than 3.5 billion pounds.
Corbyn, it must be said, is not the only contemporary politician who wants to increase tax revenue by taxing or increasing taxation on this type of activity. Bernie Sanders spoke of this in the United States and the European Union is considering it. But in these countries there is no tax similar to that in the United Kingdom. The danger is...
that Labour will end up imposing an excessive financial transaction tax, especially in comparison to other countries such as France and Germany. If this happens, businesses could migrate across the Channel.
According to the OECD, the Paris-based international organisation that collects comparable tax data, UK tax revenue generated 2.7% of national income in 2016, well above 2% in France and Germany. Although in 2016 the UK had a 20% corporate tax rate, much lower than the French rates by 33% and German rates by 30% in the same year, revenues were higher because the United Kingdom applies a much wider definition of profits. In other words, London charges a wider range of activities.
The UK also collects higher taxes on capital gains and property taxes than other advanced economies, so it is not true what corbyn– claims that businesses do not pay their fair share. OECD data show that the UK collects 1.3% of total tax revenue from capital gains compared to almost nothing in France and Germany.
Where tax differences are evident is in the national insurance sector, social security. While the United Kingdom receives 19% of tax revenue, in France social security taxes are 40% and in Germany 37%. It is paradoxical but where we should work to rebalance the tax system in line with the cross-Channel system is precisely in social security, That would ensure defeat for Labour and anyone else who wanted to embrace it.
In summary, the corbyn program at the theoretical level is interesting, but in practice it is not feasible. To raise GBP 83 billion for additional daily public spending, the tax burden must be increased from a level forecast for 2023-2024 of 34.6% of national income to 38%. This level of taxation would be an all-time record, even higher than in World War II, when Winston Churchill as prime minister increased public spending to 61.5% of national income in 1943-44. But this was largely financed by large loans amounting to almost a quarter of the size of the economy.
https://www.ilfattoquotidiano.it/2019/11/24/regno-unito-corbyn-vuole-tassare-i-super-ricchi-peccato-che-il-suo-programma-non-sia-attuabile/5576797/
According to the OECD, the Paris-based international organisation that collects comparable tax data, UK tax revenue generated 2.7% of national income in 2016, well above 2% in France and Germany. Although in 2016 the UK had a 20% corporate tax rate, much lower than the French rates by 33% and German rates by 30% in the same year, revenues were higher because the United Kingdom applies a much wider definition of profits. In other words, London charges a wider range of activities.
The UK also collects higher taxes on capital gains and property taxes than other advanced economies, so it is not true what corbyn– claims that businesses do not pay their fair share. OECD data show that the UK collects 1.3% of total tax revenue from capital gains compared to almost nothing in France and Germany.
Where tax differences are evident is in the national insurance sector, social security. While the United Kingdom receives 19% of tax revenue, in France social security taxes are 40% and in Germany 37%. It is paradoxical but where we should work to rebalance the tax system in line with the cross-Channel system is precisely in social security, That would ensure defeat for Labour and anyone else who wanted to embrace it.
In summary, the corbyn program at the theoretical level is interesting, but in practice it is not feasible. To raise GBP 83 billion for additional daily public spending, the tax burden must be increased from a level forecast for 2023-2024 of 34.6% of national income to 38%. This level of taxation would be an all-time record, even higher than in World War II, when Winston Churchill as prime minister increased public spending to 61.5% of national income in 1943-44. But this was largely financed by large loans amounting to almost a quarter of the size of the economy.
https://www.ilfattoquotidiano.it/2019/11/24/regno-unito-corbyn-vuole-tassare-i-super-ricchi-peccato-che-il-suo-programma-non-sia-attuabile/5576797/
