Governments should not subsidise business through the working poor

I don’t often blog about politics, but in the decline of the UK exchequer and the shift of blame from the corporate greedy to the working needy has seen some fundamentally unfair and downright nasty pieces of legislation being progressed by our minority government.

The latest of these policies designed to help prop up the exchequer (which we all know is carrying enormous debt caused by bailing out the greedy and reckless, and is now being bullied by the same because of its debts) is the idea to cut council tax benefits by 10% and federate the blame away from central government to local.

For those of you who are not familiar with the UK taxation system (and I’m no expert), council tax is a local tax paid by residents according to the value of the homes they live in, and funds local amenities like refuse collection. However, some people in the UK are on sufficiently low incomes that they receive benefits to help them pay their share of this tax.

Let me re-iterate that: some people in the UK are so poor that they government steps in to help them pay their tax.

On the surface, you could assert that the government is currently doing a fine thing by helping those with few means, and that by reducing the council tax help it gives to some of its most needy citizens it would be doing them quite a disservice. That’s an easy argument to make, especially since the relatively few recipients of this benefit need all the help they can get.

But the easy answer is not necessarily the right answer. I disagree with this benefit, not because I think it is unworthy, but because I think it places the burden in the wrong place. By subsidising a citizen’s tax obligations, the government is effectively subsidising employers and continuing to allow employment for far below a living wage (including the ability to meet the tax obligations that implies).

This is an outrageous situation where the government (on behalf of the citizens) subsidises corporations through beneficial corporate tax regimes, provides them with a stable and regulated market, educates and medicates their employees, and provides a relatively competent transport network to move their goods and services around. But by paying its own tax, the government is also effectively subsidising industry’s wage bill.

Governments shouldn’t be in the business of paying taxes to themselves. Governments should be in the business of provisioning services through taxes they collect. We must undo the moral and financial decay that has allowed business to free-ride from the tax payer and force them to pay a living wage and end this perversion where we subsidise the rich by using the working poor as a government-sponsored investment vehicle.

It’s time for business to pay their fair share.

Posted in Politics

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