Scottish Socialist Party Alternative UK Budget
Published by the Executive Committee of the SSP 22-06-2010
This is a summary of the SSP's Alternative UK Budget, you can download the full document as a PDF file here...
The Scottish Socialist Party opposes the economic strategy adopted by the Tory/Liberal coalition. We propose an alternative strategy based on equality, democracy and sustainability which would deliver a better economic future for the country and a better quality of life for the people. This Alternative Budget outlines the 'people not profit' policies that the SSP advocates.
Increasing government income
Income Tax
During the early 1980s the highest earners in the UK paid an income tax rate of 83%. Today, those with the highest income in the UK pay a lower proportion of their income in tax than most others in lower income bands. To redress the balance, and to raise money for public services, we would increase income tax rates.
Compass have estimated that an additional £17.2bn could be raised by taxing all income over £100,000 per year at 50% and ensuring a minimum tax rate of 40% for those with an income of more than £100,000 and 50% for those with an income of more than £150,000, and £9.1bn could be raised by removing the caps and restrictions on NI contributions.
Marginal increases in income tax would generate a total of £26.3bn per year additional income for government. If combined with more stringent tax avoidance measures it would be possible to raise much more than this from those in society with the highest incomes by increasing income tax rates further. This would include moving towards an effective maximum income by introducing a combination of wage caps and very high marginal tax rates. We believe that by introducing an effective maximum income of £80,000 per year, around £75bn could be raised per year.
Corporation tax:
Corporation tax has been halved in the last 30 years from 56% to 28%. Increasing corporation tax back to 56% would generate additional revenues of £42bn per year. We also support the introduction of an international financial transactions tax to reduce currency speculation. Estimated to generate £4.2bn per year.
Tax avoidance:
Various estimates from HMRC, the Guardian, TUC and the Treasury have suggested that a concerted effort to reduce tax avoidance would bring in about £20bn a year. The Tax Justice Network has calculated that in recent years some £120bn of tax has been avoided. Recouping some of this money, which has effectively been fraudulently taken from the people by big business, would go some way to repaying the UK national debt.
Decreasing government spending
Public ownership
By bringing the most important large elements of the economy into public ownership a new relationship would develop between the economy and citizens. Some sectors of the economy which would be targeted for public ownership are: banking, transport, energy generation and supermarkets.
The SSP is completely opposed to nuclear weapons and would immediately withdraw our troops from abroad.
We would reduce defence spending radically from the current £40bn per annum to £10bn per annum over 5 years. We would also drastically cut defence spending which would generate another £30 billion a year in savings. We would not spend any of the estimated £76bn to replace Trident nuclear submarines. We would provide those working for the MoD with alternative sources of employment which would serve the interests of the people rather than fighting imperialist wars. The STUC has recently set out how such a strategy applied to the replacement of Trident would create far more jobs elsewhere in the economy.
Returning PFI projects back into the public sector (as would be part of any re-democratisation of the newly publicly owned banks) would save around £3.3bn per annum.
Investing and spending for the future
Public transport
The SSP has costed a policy to provide for free public transport for all citizens. This policy would radically reduce carbon emissions at a stroke, reduce poverty and improve access for all citizens, improve public transport provision making it more comprehensive, and create extra wealth for society by reducing wasteful delays due to congestion. We have calculated that this policy would save the wider economy £15bn whilst costing around £8bn per year. We have also costed an additional £1bn per year in public transport capital investment.
Welfare and pensions
We have outlined that we wish to move from a means-tested welfare system to a universal welfare system where those who do not need additional support have this taxed. We have allocated in this budget an additional £7bn to fund the initial steps towards higher benefits and pensions.
Debt repayment
We do not believe that we can or should rely on future economic growth to pay down government debt. We would therefore use the surplus identified in this budget (around £10bn) to pay down the debt (this is in addition to the monies already allocated to pay debt interest payments). This would also release additional funds in the future to provide a citizen’s income, increase investment and reduce working hours.
Conclusion
The proposals outlined in this document are not comprehensive nor detail a full vision of the possibilities of a socialist economy. However, they demonstrate that cuts to public services are not inevitable, nor is it difficult to conceive of a different economic policy that would provide employment, reduce inequalities, increase sustainability, reinvigorate democracy and provide for long-term economic stability. This is in stark contrast to the plans which have been trailed by the Tory/Liberal coalition and with the plans for cuts given by the Labour government before the election.
Table 1 - Alternative economic strategy balance sheet using March 2010 budget figures as baseline
SSP alternative budget |
|
Expenditure |
£billions |
Projected UK Government expenditure as per March 2010 budget |
701.0 |
Additional annual investment in energy and housing (annual investment) |
10.0 |
Additional annual cost of free public transport |
8.0 |
Additional annual investment in public transport (capital) |
1.0 |
NHS, congestion and road infrastructure savings from free public transport policy |
-15.0 |
Cut annual defence spending from £40bn to £10bn |
-30.0 |
Cut annual spending on the introduction of ID cards |
-0.5 |
Reduced PFI payments |
-3.3 |
Cut spending on airport expansion and motorway building |
-1.0 |
Increase spending on welfare |
7.0 |
Total expenditure |
677.2 |
|
|
Income |
|
Projected UK Government revenue as per March 2010 budget |
546.0 |
Increased income tax |
75.0 |
Increased corporation tax |
42.0 |
Reduced tax avoidance |
20.0 |
Tax on international currency transfers |
4.2 |
|
|
Total income |
687.2 |
|
|
Balance |
10.0 |
The surplus would be used to repay borrowing to reduce interest payments and generate funds for additional investment |
|