ga('send', 'pageview');
John Passant

Site menu:

January 2012
« Dec   Feb »



RSS Oz House



Subscribe to us

Get new blog posts delivered to your inbox.


Site search


Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)



Tax, neoliberalism and fighting back

I went to the annual Australasian Tax Teachers Conference at Sydney University this week and gave a talk called Reason in revolt now thunders: an end to the age of neoliberal tax cant?

I explained that the reason for looking at profit rates, strike levels, and understanding neoliberalism from the wider debates about wealth, power and inequity and the decades’ long shift of wealth to capital from labour was to understand tax and tax policy over that same period. Tax is part of that wider capitalist totality.

Neoliberalism is the idea that the state can and will intervene to save capital (‘to big to fail’ for example), that it will impose market imperatives on society and that it will curb the power of workers and unions. It privatises, cuts public services and attacks its own staff.

The last 3 decades in Australia have been the years of neoliberalism, lead by the Hawke and Keating Labor governments. They laid the groundwork for the Howard conservatives which in turn led to the current version of neoliberalism, the Rudd and Gillard Labor governments.

This was and is a global phenomenon. The end of the post war boom in the late 60s and early 70s – a crisis of profitability and falling profit rates as a consequence of increasing capital investment and the decline in arms expenditure – destroyed Keynesianism as the official lie of capitalist exploitation.  It looks as if profit rates in many developed countries are about half what they were at the height of the boom

Keynesianism’s seeming bête noire, neoliberalism, became its successor. Thatcher and Reagan swept to power in the UK and US, and in Australia Hawke came to power in 1983 implementing the Accord, the agreement with the trade union leadership that was based on the neoliberal idea that what is good for the bosses is good for workers.

The defining action of Australian governments (and others in the developed world) has been to shift wealth from labour to capital. According to the ACTU the level of national income going to labour is at its lowest since records began to be kept in 1964 and that to capital at its highest or thereabouts.

Tax policy and tax law have not been immune from this process. They have aided and abetted it.

The OECD’s recent report on the global increase in  inequality shows that the Australian tax system has become less progressive and so only slows down the trends to inequality rather than address it. 

According to the ACTU the top 20% pay 34.5% in tax. For the lowest 20% it is 26.8%.  Now remember, the top 20% own more than 60% of the wealth in the country and for the bottom 20% it is 1%. So much for a progressive tax system.

Tax is part of the problem.

Why? Because tax policy and tax law are like all the other institutions and actions of capitalism – captured by the one percent and their ideology, neoliberalism. 

The carbon tax for example reflects the idea that the market – a price on carbon – can fix the problems of the market. This is a classic example of neoliberalism.

The Minerals Resource Rent Tax is a watered down version of a fairly mild rent tax anyway, the Resource Super Profits Tax. Labor capitulated to one sectional interest of Australian capital and dumped a Prime Minsiter to do so. It did not perform one function of social democracy – imposing solutions on capitalists for the benefit of capital.

Further, the government proposed using the money from both the RSPT and the MRRT to cut company tax rates. This is a redistributive measure from a very profitable sector to less profitable sectors.

Rent taxes tax economic rent. This is the extra profit that arises from monopoly or oligopoly situations or private property monopoly over finite resources.

It is competition which leads to monopoly. Rent taxes act as some sort of surrogate for competition by reducing the return on the activity much as a flood of new investment into a super profitable industry or sector would do.

 The other factor in resource rent taxes is that it is transfer of the wealth Chinese and Australian workers create to Australian mining bosses.

Essentially the state is one fo the band of hostile brothers along with productive captial, finance capital and rentiers fighting over a share of the surplus value workers create. However the state is ultimately dependent on the success of that exploitative process and so taxation cannot ‘threaten’ captial accumulation.

A look at the Henry Tax Review released in 2010 shows the same sort of neoliberal thinking. Henry was searching for a set of taxes that would remove both the legal and, if there is any, economic tax burden on capital (especially mobile capital) and that would tax less mobile factors such as labour, land and resources.

As I explained above the rent taxes are themselves neoliberal and redistributive adventures within capitalism, acting as a substitute for competition. Land taxes extract the surplus in another form, but hit the working class and tax the wealth they create through the urban centres they build and have built.

Henry also suggested a flatter tax system with workers on between $37000 and $94000 actually paying more tax.  Labor rejected that version but is looking for other variants ofd a flatter (and more regressive personal income tax system.)

Can we escape this neoliberal wasteland?

If I am correct, that the infection that is neoliberalism is a response to falling profit rates and wealth shifting as a consequence, then it is only through real fightbacks for better wages and conditions, to defend jobs and for tax justice that stopping the shift and as a part of that, taxing the rich, can be implemented.

There is hope. 2011 was the year of resistance to neoliberalism.

 The Global Financial Crisis Mark II last year and this year and the austerity programs of the ruling class and its politicians (of both ‘left’ and right) have provoked fight backs. Resistance broke out across Europe.  The number of general strikes in Greece is approaching 20. In Portugal there was a general strike a few months ago. In the UK on 30 November  2 million workers struck.

In Nigeria the general strike against a doubling in petrol prices continues into its eighth day. In India on 7 September 100 million workers went on strike., the biggest general strike in history. Another general strike across India is planned for 28 February and could be even bigger.

Strikes played an important part of the downfall of the dictators in Tunisia and Egypt. The masses swept on to the streets and swept out the architects of neoliberalism and repressive rule. The struggle continues in Syria, Yemen, Bahrain and other countries across the region.

The Occupy movement took to the streets and there were over 800 demonstrations and occupations in more than 80 countries.

Clealry something is going on – we may be approaching an epochal 2012, like 1848, 1917 and 1968.

In Australia, since the class collaborationist Accord in 1983, strikes have fallen markedly. In fact in the 70s strike days lost per thousand workers were between 600 and 1200. For the last five years the figure has been around five strike days lost per thousand workers.

This collapse of strikes explains both the shift in wealth to the rich and the neoliberalism that has infected the Labor Party, including its tax policies and laws.

A return to the strike levels of the late 60s and early 70s over wages, jobs and taxes can reverse the wealth shift to capital from labour and the increasing inequality arising from that shift.

I finished off my talk with the first four lines of the Internationale.

Arise, ye workers from your slumber,
Arise, ye prisoners of want.
For reason in revolt now thunders,
and at last ends the age of cant!

Here is a link to my comrade, Alistair Hulett, singing the Internationale.



Pingback from Tax, neoliberalism and fighting back via En Passant « The Left Hack
Time January 19, 2012 at 11:23 am

[…] Posted by Darin Sullivan on January 19, 2012 · Leave a Comment  via […]