After coronavirus lockdown, wealthy must pay fair taxes to tackle dangerous inequality – Kenny MacAskill
A fascinating interview with France’s President Emmanuel Macron appeared on social media recently, explaining how the world had changed because of Covid-19 and new thinking was required. Surprisingly, he highlighted inequality as the issue to be tackled. Whilst I’ve always been impressed by his ability, I’ve never considered him social democratic in political philosophy. It was in marked contrast though to the Johnson regime in the UK where, post-lockdown, it’s to be business as usual, with Brexit proceeding and a Singapore-on-Thames the model to follow.
But that just can’t be. The financial cost of the coronavirus is going to be unparalled. People will have suffered. Some with actual hunger, as we see with increased need for food banks. For others, it’ll be the collapse of their business that they’ve given years, if not their life, to. Many will have seen savings disappear as they draw down on them and for others the pension they’d anticipated erodes before their very eyes.
There’s going to be more than sorrow with real anger and it’s for that reason that inequality needs to be addressed. It’s a pity that Macron and his ilk did nothing about the gap between rich and poor that morphed after the financial crisis over a decade ago. Then the rich got not just richer but ever more shameful in their flaunting of it. Harry Enfield’s “Loadsamoney” in Thatcher’s day was like nothing to the craven materialism that followed. Visible consumption by the super-rich grew and social ills from homelessness to rising crime escalated as a result.
This time there’s going to be a significant difference and not just with the extent of the financial problems the country’s going to face.
The debt is going to be huge and folk are going to be told there’s no money for this or cash for that. Costs will have gone up, but incomes will have come down. Services will be cut to the bone, but charges will require to remain the same. Pay rises will be but a distant dream for many and beyond the capacity of many businesses.
This time there’ll also be the added factor of an impoverished middle class. Previously the pain was largely though not exclusively borne by the poor or unskilled. This time highly skilled and even reasonably wealthy people are going to find themselves out of work or their savings or business gone.
MPs’ pay rise
It’s for those reasons that tackling inequality will be necessary. For sure higher taxes cannot be imposed across the board. The economy requires people to spend to get life going again, even if it’ll be modest for many. But there must be a recognition that those with most must shoulder the greatest burden.
It’s for that reason that the proposed MPs’ pay rise at the end of the month is as necessary as a hole in the head. It’s outwith MPs’ control as it’s decided by the Independent Parliamentary Standards Authority (IPSA) but a public sector pay freeze for higher earners would stop it. Whilst those at the bottom are struggling and many in the private sector likewise, pay restraint is needed and rises are simply unacceptable at the top.
But it must be much more than just targeting higher earners and must involve wealth and assets. Those who have avoided or mitigated their tax by offshoring investments are the real culprits of the explosion of inequality. Likewise, it’s not high-earning footballers that need to be targeted this time but those with land or trust funds that have avoided paying their share, or even avoided paying anything entirely by placing their wealth in a tax haven.
High pay isn’t an issue if there are reasonably high bands of tax. But the failure to pay any tax on hidden assets and the copious wealth that flows from it is a disgrace. More importantly in these troubled times it’s simply not acceptable.
Denmark’s made it clear that it won’t bail out companies which pay out dividends or are registered in tax havens. It must be the same here. Support must be conditional on behaviour, not just given as of right. In the financial crash many lost life savings but had to watch as bonuses continued. And it shouldn’t just apply to corporations but to individuals. The rich have to ensure they pay tax on their wealth, not just the limited income they declare.
There can be no return to the growing inequality gap and indeed quite the opposite must be demanded. There’s going to be a lot of hurt and angry people about and helping them is going to be essential. But so too must be avoiding rubbing salt in the wound by unnecessary pay rises for high earners. And more importantly, we need proper taxation on wealth, wherever and however it’s held.
Kenny MacAskill is SNP MP for East Lothian
Want to join the conversation? Please or to comment on this article.