Politicians are conscious liars—often proudly so. Indeed, that’s their job, to persuade people to support them regardless of their merits rather than because of them, and to justify the actions that the economy demands they make. Politicians confront journalists, grinning from ear-to-ear, knowing their interviewer knows that they are lying, as they dance through the empty ritual of a media interview.
The issue of taxation dominates contemporary political discourse, with each party competing to be the Party of Low Taxation, whilst simultaneously offering voters higher public services. Tories allege the tax burden has risen, Labour states that tax rates have been cut, endless streams of statistics are hurled in either direction, with illumination being no-one’s goal. In the meantime, leftists bleat and demand that Labour “tax the rich and make them pay”. On top of all that, the immense complexity of the taxation system and tax havens, coupled with intricate shifts in the economy and in methods of presentation, makes it a struggle to try to accurately find out what is really happening.
As a part of the politicians image campaigns, and their half-truthful manifesto, they pledged themselves to lower income tax when elected. In the manner of political debate, this allowed their speakers to state that they were going to lower taxes (that is, income tax) even as and when they were going about raising the overall tax burden. The shift from taxation directly on the point production to indirect taxation on consumption has been gradually going on.
There are limits, though, to the extent to which a government can exploit a monopoly or oligopoly to levy duties. If businesses are able to pass on the tax increase to the consumer in the form of higher prices this can cause problems. In some circumstances, if the price of a product rises alternative products are sought and demand is choked off. But since both tobacco and fuel, for example, are in their own ways essential with few if any substitute goods available, the result of any price increases caused by tax rises is that black markets and resentment grow up (as the state capitalist regimes in the former Soviet bloc found out). Recently the government has had to increase the amount of money spent on enforcing tobacco excise duty, which has eaten in considerably to its taxation gains. Despite the tantalising promises of politically safe revenue for governments, there are limits to the amounts that can be levied through excise duties.
The reality of the government’s position is that the state is effectively a tax-farming business, and like other businesses, it is entirely subject to the ebbs and flows of the market. It can only raise so much taxation, from any given source and the economy as a whole, as the state of the market will bear. Given that the surplus value siphoned off via taxation is surplus value that cannot be re-invested for capital accumulation by the private sector, taxation represents a restriction upon the capitalist class. Hence, historically, high taxation has been seen as anathema by the capitalists. The amount of tax revenue the state can garner is entirely circumscribed by the needs of profitability.
State spending cannot add to the total of demand in the economy, all it can do is actuate demand, and guide it to overcome consumption problems (e.g. such as sustaining the reserve army of labour). In an economy without nationalised units of production—such as we now have—the best it can do is simply help circulate goods.
Capital can tolerate the lost potential valorisation in times of plenty, but when accumulation and profitability slow, it begins to resent the resources lost to unproductive expenditure. Given that taxation has risen from about 9 percent of GDP at the beginning of the century to nearly 40 percent now, a figure that both Labour and Tories seem unable to reduce, it is clear that taxation is becoming too burdensome upon capital.
Like a ragged, has-been stage magician, the government must keep on performing its budgetary tricks to give the appearance of doing something—anything—to keep hold of some sort of interest in its audience. Taxes go up, go down, and are moved from place to place in a blinding game of find the lady. Underneath it all is a watered-down version of an old illusion—the illusion that the state can control the economy, can direct its course, by playing around with its tax structure. That the act remains the same, time after time, will not stop the show, since the has-beens refuse to stop. They need booing from the stage.