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Paul Murphy: The case is growing for a ‘Covid Tax’ on the rich to avoid future austerity

RISE TD Paul Murphy is part of a new Europe-wide campaign for a ‘Covid Tax’, to avoid saddling people with years of austerity after the pandemic.

Paul Murphy

AS THE COST of the coronavirus crisis in Ireland and globally mounts, the question of ‘who will pay’ is going to come centre stage.

This week, as part of Budget 2021, the government refused to restore the €350 Pandemic Unemployment Payment, despite moving to Level 3.

The reason? It’s “not sustainable”, in the words of the Taoiseach.

Minister for Finance, Paschal Donohoe has predicted a deficit of over €21 billion this year. A large deficit next year is also likely.

Of course, this is not just in Ireland, it is a Europe-wide and global phenomenon, as the World Bank forecasts that the world economy will shrink by over 5% this year. 

New normal brings new inequality

The real danger is that after barely emerging from the last capitalist crisis, we face a decade more of austerity, starting before the pandemic is even over.

The “we all partied” of 2008 will be replaced by “It’s all about individual responsibility now”. The end result will be the same – cuts to vital public services, the extra tax burden on working people and all of the consequences in terms of deprivation, poverty and mental health which we are unfortunately familiar with.

Once again, action to rapidly halt environmental destruction and reduce carbon emissions will likely see further delays.  Socialists reject the idea that we have to repeat that experience.

The enormous wealth in our societies has not simply disappeared. In fact, billionaires increased their wealth from April to July by 27.5%, with their total wealth increasing to over $10 trillion!

They got richer by betting on the stock exchange while workers around the world were thrown out of jobs. The owner of Amazon, Jeff Bezos, is the biggest winner from the pandemic, with his net worth now exceeding $200 billion as Amazon shares soared due to the shift to online shopping.

The Covid Tax

That is why activists from across Europe have come together to launch a Europe-wide campaign to apply a ‘Covid Tax’ on the wealthy and big business. I had the privilege of attending (over zoom) a launch meeting of this campaign last week. 

The proposal, which I have co-signed sets out:

The crisis of the Covid-19 has forced European states to a series of exceptional expenses to cope with an extraordinarily serious health and social situation.

The short-term suspension of the implementation of the Treaty of Stability and Growth has allowed to increase the levels of deficit without the threat of sanctions by the European institutions.

However, the question now is, who will pay the bill: if the indebtedness of the States will lead to new plans of austerity and adjustment, or if the privileged will be forced to pay.

It is therefore urgent to put on the political agenda the distribution of wealth, the idea that high incomes and large estates should be taxed for the benefit of the collective interests.

It is a campaign supported by left-wing MPs and MEPs from more than ten countries in Europe, trade union activists and leaders, as well as representatives from campaigning organisations like Attac. Research on the proposal has been carried out by left-wing economists involved in the Campaign for the Abolition of Third World Debt and others. 

The proposal includes four different emergency taxes in order to make the rich and big corporations pay for this crisis: Taxing high corporate profits of major corporations; A wealth tax on the super-rich; A tax on the assets of investment funds; And a tax on the transfer of assets.

In addition, it calls for a cancellation of all debt linked to tackling the causes and effects of the pandemic, the suspension of state assistance to companies engaging in tax avoidance and breaking with the straitjacket of neoliberal economic policy in the EU.

Although the implementation of these policies in a coordinated way across Europe would clearly be preferable, even one country implementing these policies would dramatically change the political terrain across the continent.

Applying these to the Irish economy, the amount of money that could be raised is astounding. A 3% extra tax on corporate profits exceeding €5 million would raise over €2 billion.

A 3% wealth tax on the richest 1% of people in Ireland, who own an average wealth of over €6 million each, would raise €3.6 billion. 

A 1% tax on the assets of investment funds and holding companies, excluding pension funds, would raise €22 billion! Finally, increasing the tax (Stamp Duty) on transfers of assets, excluding shares and residential property, would raise €600 million.

In total, these measures could raise over €28 billion – covering the deficit and leaving €7 billion left-over. How it is spent is vital. It should be invested in major public investment to transition to a net-zero carbon economy by 2030. 

For example, in free, green and frequent public transport for all, in building an Irish National Health Service, in building public housing and in creating thousands of jobs in the care economy (including education, childcare, and elderly care) and renewable energy.

The chorus of ‘it’s impossible’

Of course, the usual array of right-wing politicians will line up to say all of this is simply impossible. They are the same ones, like Leo Varadkar, who one night display a sudden concern for poverty and the fate of people on the PUP and two nights later vote against the restoration of it. 

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Simply accepting Ireland’s position as a tax haven for multinational corporations and the rules of global capitalism, means that the only “difficult choices” that are ever acceptable are those that hit working people. Part of the rationale for the ‘Covid Tax’ is to urge people to break out of that straitjacket of capitalist thinking, by demonstrating the vast amounts of wealth held by the very richest.

The pandemic has highlighted the inequalities in our society and the underinvestment in our public services. Decades of underfunding have left our health services hanging by a thread, and our classrooms among the most overcrowded in Europe.

This should be a wake-up call, that we cannot go back to the neoliberal capitalist model. Instead, we need to be prepared to take on the super rich tax avoiders, challenge the rackrenting landlords and tackle the big business polluters.

For socialists, it is only part of the struggle to reshape society in the interests of the majority – by taking control of the wealth-producing sections of the economy out of the hands of the few and into the control of the many.

Paul Murphy is a RISE TD for Dublin South-West, part of the Solidarity – People Before Profit grouping in the Dáil. Twitter @paulmurphy_TD.

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