Who Should Pay for the Pandemic? – Liberal Article
Rishi was right, the economic emergency has only just begun. But who will actually feel its effects? Who will actually experience this economic crisis? Who is going to pay?
The consequences of the pandemic can not be monetized. However, financial costs are necessary to mitigate further damage and ensure recovery. How this recovery will play out depends on who the government decides should pay for the pandemic. Who is to fund the necessary increase in public spending?
The spending review announced last week indicated that once again the burden of an economic crisis will fall on those most economically vulnerable. This is not only an unfair approach but economically impossible given the state of the economy.
Government borrowing is at a peacetime high. Many businesses will not reopen. One million more jobs are expected to be lost in the next sixth months. More people will be reliant on the state. So how can those who have suffered the most now be the bedrock for restoration?
The expected £300bn to be spent on COVID-19 by next year is the very minimum. Spending on business grants health care and unemployment will continue to increase. We are in an economic recession awaiting a no-deal Brexit. Things aren’t looking good.
And then there’s the next pandemic.
Covid wasn’t a surprise. Experts have been warning for decades that a pandemic was on the horizon. However, there’s no profit in preparation, so of course, preparation never occurred. Instead quite the opposite. The last ten years of austerity cost lives and worsened the impact of Covid.
The decision to cut social spending led to the introduction of food banks, a homelessness crisis, the first generation to be economically worse off than their parents, and a health care system that was unable to meet the requirements from the 2006 report on pandemic preparedness.
Politicians have claimed austerity enabled the economy to recover however this recovery has not been materialised in the lives of the population. The response to the last economic crisis was a crisis in itself. And it’s about to happen all over again.
This year we have relied on a bigger government. From the enforcement of mandatory masks to food packages for those isolating, the government has reached into almost all aspects of our lives. Government support has been necessary and in most cases welcomed.
Yes, our government’s response was not the best in the world, far from it. But it was better than no response. If we, as a society, are to recover from the aftermath of Covid we can not cut public spending.
Instead, we need higher taxes on those with the means; we need to super tax the super-rich. Not everyone has found this year anxiety-inducing and draining. In fact for billionaires around the world, this year has been a success. This ultra-rich class has actually increased their wealth more than in 2019!
In fact, theoretically, the richest twenty people in the UK could cover our Covid bill. Yet they are not even expected to help.
The growing disparity of wealth is a structural issue supported by neoliberalism’s laissez-faire attitude. This attitude doesn’t help those on stagnated wage, those unable to keep up the increasing rent. Nor does it help the child who can’t afford lunch.
When money is your political voice, your freedom ticket, the economy will always be skewed towards the richest. This privilege will never disappear. The rich will always be heard.
What could disappear is the politicians who voted for penalizing the poor whilst privileging the rich. Since 2010, as homelessness has increased by 165%, the billionaire class has increased by 168%. The group you fall into comes down to luck.
The occasional philanthropic act, such as Bezos’s donation of $100 million is not sufficient. Frontline workers have isolated themselves from their families, 50% of business turnover has fallen and 15% of global youth have lost their jobs. This year has been full of sacrifices. A donation equivalent to 0.1% of your wealth just doesn’t make the cut.
We need a structural solution to this economic crisis. And we have it: taxes.
The top income tax bracket in the UK is £150,000 a year. Yet half of the country’s income is held by those earning over £200,000. This might only represent under 10% of the population, but clearly, this is not an economically homogenous group. There is more bracketing to be done.
A more economically productive form of taxation would be a generous wealth tax. This would help tackle the intergenerational intensification of inequality and cause no harm to those affected, unlike the spending cuts.
Even just closing tax loopholes could prevent healthcare services from needing to be rationed. In 2016, a twenty-eight-year-old avoided inheritance tax on his father’s £8.3 bn. He became the UK’s youngest billionaire by chance. At the time the NHS was experiencing its then-largest deficit, £1.85 billion.
We’re in a social, economic, and health crisis and it’s time to pull together. It’s been done before and it needs to be done again.
We can’t continue having socialism and tax cuts for the rich whilst the ques outside food banks continue to grow. Another decade of austerity-like measures will ruin our social infrastructure.
Written by Senior Liberal Writer, Abby Milnes
Point of Information
Higher Tax is an Inevitability – A Conservative Response
While a wealth tax might work in some countries, it isn’t a suitable solution to this crisis. The two responses to this previous article discussed why, but in summary, it would lead to a double tax and a rushed and flawed system would do more harm than good. It might be a plan for the future, it is not a silver bullet for the crisis as some might have you believe.
The Institute for Government suggested that there is a need for tax rises, however not immediately. They suggest building public support for tax rises first, in order to make them more palatable.
One option suggested by the Office of Tax Simplification is that Sunak reforms capital gains tax, in order to make it similar to income tax. This move would raise £14 billion for the chancellor. While this wouldn’t pay for the pandemic as a whole, it would help.
Something else the government could introduce is a working at home tax. This was proposed by the Deutsche Bank, and they believe that employees should be taxed for working at home. This would raise an estimated £7 billion a year if the tax was at 5%.
However, I disagree with this being levied at the employee. This adds an unneeded disadvantage for them compared to the many advantages of working at home. Perhaps it would be fairer if it were aimed at the company instead.
Another thing that must be considered is the impact of Brexit. There was no mention of this in the spending review, yet this will no doubt have an effect on our economy. It is looking likely that there won’t be a trade deal, so this will have a negative effect that will also need to be dealt with as well. This will be an economic hit that worsens our situation
One answer to the question of who will pay is partly other countries. Sunak recently announced a foreign aid cut, and this is needed. It is hard to justify aid when our whole country is hurting. Two-thirds of people agreed according to a YouGov poll.
These moves are nowhere near enough to solve the recovery alone. The government will need to get inventive in order to solve the economic crisis. Higher taxes are an inevitability, unfortunately.
However, economic recovery can only take place once the threat of the virus has abated. Otherwise, if we try to do it now, the unstable nature of the pandemic will cause it to fail.
We will only see who will truly pay for the pandemic next March, in the next budget, or spending reviews as they’re now called. We will have to wait until then to see the answer to this question.
Written by Senior Conservative Writer, Kieran Burt
People are struggling, but a wealth tax won’t help… yet – A Labour Response
It is obvious at this point, nine months into the depth of the pandemic, that the people who will truly feel the effects are the working class and those with a lower income. Logically they cannot afford to keep businesses open or to take time off work without some economic package in place.
Through the course of this pandemic, the government has continuously emphasised the importance of rebuilding the economy through staggered reopening of pubs and restaurants, and of course the notorious eat out to help out scheme.
While good in theory, these measures presented obvious problems, namely the further spread of COVID-19 and the lack of support this offered to those genuinely in need.
The latter is the focus of today’s response – the government’s previous attempts to rebuild the economy did nothing to support those in genuine financial hardship. So what can they do now?
With a typical Labour sentiment, you might expect me to echo Abby’s calls for a wealth tax. The exacerbation of financial hardship is ongoing. An egalitarian response that could offer a move away from this seems reasonable then, right?
While I would agree that this is both a necessity and an inevitability, unfortunately, I don’t think now would be the ideal time to impose a tax increase. Rather, the government needs to reinvent its support packages to target those who really need them.
Large businesses and conglomerates are unlikely to need the same support as your local independent corner shop. These businesses, and the families behind them, cannot be viewed as statistics alone.
Also, just imagine the outrage of those who have to pay the higher taxes. While it is not a secret that they can afford it, they won’t necessarily want to pay a larger sum. Tensions are already high during these difficult times. Not to mention the pandemic is far from over and its precarious nature needs to be monitored daily.
Ultimately, a wealth tax is both necessary and inevitable – I am not denying this. But I don’t think now is the right time with existing tension towards the government and the unprecedented nature of the coronavirus pandemic. The government must work on reinventing its support packages immediately, while simultaneously developing a plan for when the pandemic concludes.
Written by Chief Labour Writer, Abi Clargo