Compound Lies 1: taxation

“I think we should go back to first principles and causes and ask what government should be doing and the answer is “not a whole lot”. It certainly does way too much and we could certainly get rid of a lot of it. We shouldn’t give people free money. You know, we should get rid of welfare programmes, we need to have purely private pensions and get rid of state sponsored pensions. We need private schools and private hospitals and private roads and private mail delivery and private transportation and private everything else. You know government shouldn’t be doing any of that stuff. And if it didn’t do any of that stuff it wouldn’t need all of that tax money so that’s the fundamental position and as long as you’re going to have government do all that stuff you’re going to have all those high taxes.” (Alvin Rabushka, the man who invented flat tax, quoted in Richard Murphy’s Blog)

The leader of the Liberal Democrat Party, the minor partner in the Coalition Government of the United Kingdom, asserts that his party has met its promise to  “remove many low earners from the income tax system altogether”. Setting aside whether this has actually been achieved, the more important point is why it should be the aim of a democratic government in the first place. One argument in favour of the change is that this stops government “taking money out of the pockets of those who don’t have much in the first place”. (Roy Meakin, writing for The Taxpayers Alliance)

The untruth which Roy Meakin’s statement includes, one which is reinforced all too frequently not just by his fellow anti-tax lobbyists but by BBC presenters such as Peter Allen and members of the public and politicians (many of whom actually know better) when they lazily speak of  “taxpayers’ money”, is that taxation is the practise by government of removing (and redistributing) other peoples’ property.  As Richard Murphy cogently argues in The Courageous State and Nick Shaxon in Treasure Islands, taxation is intimately bound with the provision of property rights by legitimate governments and legitimate governments have a right to raise tax.

The Government is not taking money out of anyones’ pockets, because that money is the Government’s by right of its legitimacy. The Lib Dems have constructed a policy which is based on a lie. Moreover, it is based on a confidence-trick that is central to neoliberal thinking, which is that the way to utopia is to reduce taxation. By reducing taxation, the state can be reduced: by reducing the state, taxation can be reduced. This has nothing to do with efficiency and effectiveness, though these are frequently put up in pretence: the neoliberal denial of taxation is the neoliberal denial of the state. It is the re-assertion of the dogma that the state cannot provide services. Or must not.

For it is axiomatic that private enterprise, through “the market” is the only way to provide services, and the only way that services can be provided. In a recent speech to a right-wing thinktank, Policy Exchange, a Coalition Government minister made the government’s aim perfectly clear: the aim is to end once and for all the idea of any provision of public services by the state (David Hencke, Tribune Magazine) It is worth re-reading that aim. Sir Francis Maude states that the Coalition’s aim is not to reduce public services, or even to end them: it is to end once and for all the idea of them.


This aim is not in the Conservative election manifesto, and it is not in the Coalition agreement. Another lie is being perpetrated upon the electorate and the subjects and citizens of the United Kingdom by its government.  But this is not the end: the next lie is a lie of omission: what should a state “do”, and how should that be funded?

Because only the most extreme of the extreme libertarians argue for no state at all. After all, most realise that if there were no state there would be no property except that protected by private armies in a lawless zone; and all argue for “free markets”. Yet it is not paradoxical that a “free market” could only exist if there were a state to create and protect its existence and its freedom. And how could a state raise the moneys to provide that protection without taxation or public debt? The neoliberals clearly desire a state that protects markets. Which brings us to the next lie, the fundamental lie of the “small state”.

The “small state” is only small for the elite (or the elect): for the most the neoliberal state is large, and it is brutal. Neoliberal regimes are characterised by assaults on workers’ pay and conditions, by the removal of welfare and imposition of workfare, by the mistreatment of the disabled, by prejudice and violence against women, by panoptic supervision of public spaces and workplaces, by overflowing prisons and harsh legal regimes aimed at the victims of neoliberal policies, by bureaucratic means-testing for benefits, by lack of access to education and healthcare.  The neoliberal state is not a small state: its function of forcing everyone into the “markets” is as brutal as any repressive regime. The violence of neoliberal regimes in the reduction of public services and the suppression of dissent is well documented in Loic Wacquant’s Punishing the Poor and Naomi Klein’s Shock Doctrine. It’s near to final form is most probably suggested by the horrifically violent free market dystopia which is Amexica.

The ethical response to the compound lie about the evil of taxation is to make the case for the state, and to therefore make the case for public services, and to make the case for the benefits of taxation. The worst legacy which we can leave our children is not public debt as Nick Clegg and the neoliberals would have it: it is the end of democracy; it is the fished-out, dead oceans; it is the wholesale reduction in the quality of human life in the unequal world that will result from the loss of state-provided welfare, healthcare and education. And we know, as the Government hands out contracts to private companies and pays them from taxation, that there is yet another lie in here: that privatisation will reduce government spending. How can it, when governments pay private companies and purchase vast quantities of armaments?

We need a real Clause IV moment: a realisation and acknowledgment that there are limits to the markets, and limits to what private enterprise can achieve without the regulation, order, and services provided by the state. Tony Blair’s Clause IV moment was just another lie, that by its elimination he made Labour electable: by deleting Clause IV, the Blairites and New Labour announced their commitment to the neoliberal project.


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