Public sector needs to be paid for fairly

Feb 16 2009 by Kevin Rowan, The Journal

ONE of the emerging issues in the economy, one which both the Government here and in other countries can and must address, is the appalling tax cheating that has been going on at both an individual and corporate level – the same individuals and corporations who contradict themselves by suggesting the size of the state is too big and who now are holding out the begging bowl for the Government to pour in taxpayers’ money to bail them out during these difficult economic circumstances.

Alarm bells rang loudly a couple of years ago, when it became clear that multi-millionaire executives of private equity firms were paying less tax on their incomes than the always impoverished, usually vulnerable office cleaner. This appalling revelation should have inspired swift and significant action then, but it seems the economic dependence on this footloose mass capital tempered any strong reaction from our or any government.

Now, however, the tables have turned somewhat. Private capital is no longer ‘King’. Now it is the state – or the taxpayer – that is seen as the key to underpinning, stimulating, developing and mobilising the economy.

But it is not just the relatively small businesses. The numbers seem unreal to most people, but £800bn has so far been poured into the banks; the major private sector investors in a wide range of large scale capital projects are all seeking further public sector security – or money, to you and me – and only last week we learn that the Government is being asked to give consideration to nationalising PFI, the flagship Tory route to secure private sector capital for public projects, adopted by the Labour government. The reality is the tax payer was always due to pay for PFI over the longer term – it is essentially a way of mortgaging public sector investment and trade unions have been consistently critical of it. This latest development exacerbates these concerns.

Are any of these parts of the business community changing their tune over tax, suggesting a progressive tax system that is good for them, fair and transparent? Not yet. They still rail against ‘big government’ and still invest in complex business structures to avoid paying as much tax as they can get away with. The truth is the public sector has never been more necessary, it is crucial to helping us cope with the recession and vital for us to recover from it. But it needs to be paid for, fairly and by everyone.

Kevin Rowan is regional secretary of Northern TUC