For an excellent article detailing the arguments as to whether the deficit must be addressed in the terms laid out by the media and politicians, do look at the article on the Red Pepper website called “Countering the Cuts Myth.” In the meantime we are going to look at some of the alternatives to the proposed cuts in public services.
“We’re all on this together” - that is the familiar mantra from political leaders who accept that the cuts may be painful but insist they are necessary. They suggest that the alternatives have been explored and these cuts in public services are the only way to respond to the economic downturn we find ourselves in following the financial crisis of 2008.
Thankfully this is not the case. There are in fact many alternatives that both the current and previous governments have failed to explore.
The first alternative is to ensure that everyone is paying their fair share. According to Citywire, £30 billion every year is lost in Tax Evasion. That amounts to fifteen times more than the figure lost from benefit fraud. This £30billion does not include the amount of revenue lost through tax avoidance - the legal exploitation of loopholes in the law to ensure the wealthy pay the minimum amount of tax possible. A multimillion pound industry has sprung up entirely dedicated to serve this end. Despite a government announcement about its intention to crack down on those who do not pay their taxes, the government has come under attack from HMRC managers who claim excessive cuts will severely inhibit the ability of the HMCR to make good on this assurance whilst they are to potentially loose up to 13,000 staff.
A popular alternative to cuts is the introduction of a Robin Hood Tax, a proposed 0.05% tax on financial transactions that could generate £20 billion a year in the UK alone. It is supported by a huge number of charities, trade unions and even Nobel-prize winning economists such as Joseph Stiglitz.
In its alternative budget 2010 Unison also suggested that about £5 billion could be raised every year from a tax on vacant housing. This would have the added benefit of ensuring that we use our available housing stock more effectively at a time when housing stock is at a premium.
It is also now clear that the so-called “trickle-down affect” (the idea that wealth created in financial centres will somehow cascade to the most needy in society) that successive governments have targeted their economic policies towards enhancing, is a myth. According to the latest figures available 1% of the population owns 21% of our entire wealth, while 54% of the total wealth in the UK is owned by just 10% of the population. Clearly we are not all in this together. If we introduce a 50% income tax rate for those earning over £100,000 a year we may go some way to making wealth distribution a little fairer, as well as raising an additional £4.7billion a year.
Of course this list is by no means exhaustive but will hopefully give some indication of the huge number of options that must be explored before such drastic measures as cutting services and putting people out of work is even contemplated.