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Inflation hits the poor

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No cost of living crisis for oil companies and the wealthy

Ashley walker

The phrase ‘cost of living crisis’ will likely be one a person reading this article will be well aware of, while most news outlets and left-wing commentators etc. are reporting, at fever pitch, specific studies and statistics which show the scale of the problem, or on the complete failure of the UK government to deal with this crisis in any truly meaningful way, what is being talked about less and less are solutions.

The government could alleviate the problems but for them division and profit always comes first. The gap between the rich and poor continues to widen and the wealthy fight for their riches with cunning and ruthlessness. That is why offshore banking systems exist – to protect the money that they made from exploiting workers.

An article in the Guardian based on a study by the University of Greenwich [1], shows how with a wealth tax on the top 1% of households in the UK, and with 50% of those evading paying the tax, which would only happen if enforcement of paying such a tax is weak, £70 billion could be raised in a year. The article also suggests ways to counter the typical argument made against such a tax by the wealthy, usually lack of liquid assets.

To put that in perspective if we divide that £70 billion by the UKs current population of 67.22 million that would mean £1,041.36 of wealth transferred from the richest 1% to every person in the UK in one year, not enough to solve the cost-of-living crisis by any means at all, but certainly enough to help.

There are other relatively simple measures which can be introduced as well, an already planned corporate tax rise is expected to raise in 2023, around £19.8 billion [3]. Which when split between every person in the UK would mean £294.55 per year.

According to the government the tax gap, the difference between tax collected and tax that was theoretically due, cost in 2019/20 £35 billion [4], if this gap was properly closed and enforced it could be an extra £520.68 per person per year.

Name of measureHow much it would give an individual in the UK in a year.How much it would give an average UK household in a year.
Wealth tax of richest 1% of households£1,041.36£2,449.26
Corporation tax rise being made immediate£294.55£706.92
Tax gap being closed£520.68£1,249.63

This table shows that with just these 3 relatively simple measures, every single individual in the UK could be given £1856.59 a year, the average UK household has 2.4 people in it so an average UK household would receive £4,455.81 a year. This amount of money isn’t going to fundamentally change people’s lives that much, but it would definitely help everyone in the UK to improve their material conditions.

There is no doubt more that could be done, for instance the study around wealth tax states the figure is £70 billion if 50% avoid paying it, if only 15% avoid paying it that figure increases to £130 billion which means each person gets an extra £892.59 a year, which would mean each average household gets an extra £2,142.21 a year, bringing the total amount for an individual to £2,749.18 a year and the total for an average household to £6598.02 a year.

Also, as Modern Monetary Theory or MMT tells us, governments which control their own currency such as the UK with the £, create the money they intend to spend, then take money out of the system via taxation to prevent inflation, as such the money could be given very quickly safe in the knowledge that due to it being based on taxing, inflation would be avoided. This is a very simplistic interpretation of the ideas of MMT, MMT itself is also a set of ideas which do have some problems especially from a Marxist perspective, namely that they don’t tend to address the motivations of the state, and only really are tools to be used within a capitalist state.

Some may say shouldn’t this money be means tested and not universal, there are however problems with means testing not least of which is the only way to means test is to increase the bureaucracy required to get the money, this means more money must be spent to have that bureaucracy, and that money could only come from the amount raised, meaning more money spent on bureaucracy and less going to help people.

There is also the fact that a lot of government’s ways to means test is often to impose income limits, often based on vague income numbers of what counts as poverty, numbers usually created on often faulty logic by government bureaucrats or such, once a person exceeds such an income limit, regardless of their circumstances the money they receive is cut supposedly in comparison to the amount they have gained, but this just disincentivises people to try and improve their material conditions for fear they will end up no better off.

It also divides people between those who receive the money and those who do not, even though a lot of time all those people could use help protecting or improving their material conditions.

It is for these reasons and more why this article doesn’t support the idea of these measures being means tested.

There are other methods to improve people’s material conditions as well, for instance the burden of Council Tax could be alleviated if not eliminated by instituting some form of Land Value Tax.

The minimum wage for all people aged 18 and up should be increased to £10.50 an hour and all social security payments should be similarly increased to support people who use social security as well. The ISL support the idea that wages and social security payments should automatically rise by law with inflation.

The starkest thing to take away from all this is that all these things aren’t even radical measures by any means, they are relatively easy solutions which can be implemented within the framework of capitalism. What this shows is this crisis like most if not all others are caused by or at least made worse by capitalism and yet capitalism with relatively little effort could also solve it, the reason it doesn’t is simple.

Capitalism doesn’t do so because it doesn’t want to, and it doesn’t want to because it doesn’t care, it doesn’t give a flying damn about the suffering of the people of the UK, it cares about nothing but its own selfish psychopathic pursuit of profit.

The solutions in this article are simply immediately available treatments for some of the symptoms of economic inequality, the only true cure for economic inequality, is the destruction of the capitalist system, by the means of production being placed under the democratic control of the working class, and the organising of all the societies of the world based upon the needs of humanity not the greed of capitalists.

In the short term we at the ISL call on people to demand that the measures talked of in this article and more are instituted in the UK, as permanent measures.

We further call on the working class and oppressed people of the UK to unite together to demand more and better actions on the many issues facing the UK such as an end to firing workers and linking wages to inflation

So long as capitalism exists, we will experience endless crises, as capitalism’s insatiable psychopathic pursuit of profit means it is incapable of not causing crises, capitalism must be destroyed and replaced with socialism. It is this system that presses down on workers and working class communities every minute of their lives. [1] [2] [3] [4]

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