Bernard Purcell has a rather interesting article regarding the reasons for why the ConDem government has persistently referred to Canada’s experience of slashing public debt as a model of economic excellence – whereas, Sweden’s social democratic approach has been ignored:
“To date, the coalition has studiously avoided references to how then Swedish Prime Minister Goran Persson’s social democratic government of the same period wiped out a 13 per cent budget deficit in four years…
Mr Persson repeatedly emphasised the need for all people to feel they are taking their own fair share of the burden. This was achieved in Sweden, he said, by accompanying public spending cuts with tax increases for the wealthiest…
The swift retreat by Mr Cameron and Mr Osborne in the face of Tory backbench opposition to a suggested increase in capital gains tax to the same levels as income tax shows how ill-disposed the party will be to following the Swedish example.”
Whilst Sweden rightly increased the taxes of the richest in order to help deal with the deficit (which studies have shown, did not result in companies deserting the country)…
“…the 1992 Canadian government’s austerity programme – to cut a deficit of £25 billion – came after several unsuccessful earlier attempts and was marked by the immediate loss of 40,000 public sector jobs at a stroke and extensive cuts to schools and healthcare.”
It is therefore no surprise that Tory minister Bob Neill slipped up and revealed the truth, that despite government rhetoric “those in most need will bear burden of cuts”! The Guardian today has also ran a rather interesting piece regarding the true nature of the cuts announced so far, and how it appears as though the government has a rather different definition of what constitutes frontline public services, with key frontline services being cut. Blunkett highlighted how Sheffield will have to cut by 18% whereas Cameron’s constituency, a very wealthy one at that, will have to cut by only 1.7%.
Thus, in neglecting Sweden, the government do not have to justify why they are choosing the model that focuses on public spending cuts whilst neglecting the need for fairer taxes so those most able to pay are precisely the one’s who pay more. It is so unjust that people can be earning hundred of thousands to millions and can pay less than someone earning less than average income.
As Purcell highlighted, the backbench opposition to measures such as the increase in capital gains tax, well this illustrates the struggle that the government will have in introducing any form of re- distribution within the tax system (Left Foot Forward have a good article on how regressive capital gains tax is). As stated before, even the income threshold rise is regressive as the LibDem’s measures for paying for it have been dropped, so the funding will mainly through public spending cuts – little wonder it has been described as a ‘Tory dream’.
People cannot be fooled into thinking that the Canadian model is the only way, nor that it is the best way. 40,000 public sector job cuts, immediately, well that is just disastrous. Furthermore, the so-called ‘Star Chamber’ – well that has been criticised too(see Left Foot Forward for a really good article on this).
The government’s unfair economic approach becomes clearer by the day. The emergency budget looks as though it will be a very dire read indeed.