Brown’s bonanza for City speculators

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ALMOST a third of Britain’s 700 biggest businesses paid no corporation tax in 2005-2006, according to a study carried out by the official National Audit Office (NAO), the results of which were published yesterday.

The NAO found that 220 of the companies paid no tax, 210 paid less than £10m and 50 paid 67 per cent of the £24.4bn raised by the Treasury in corporation tax from the 700 in that financial year.

These 700 huge businesses pay only 54 per cent of the total collected in corporation tax, with smaller companies paying the rest.

Multinational companies using intra-group loans, private equity groups and hedge funds claim tax discounts against the huge sums of money they have borrowed. Other big firms can claim tax relief if they pay into their pension funds.

This has all taken place while Prime Minister Gordon Brown was the Labour Chancellor (1997-2007) and he was responsible for tax policies and financial regulation in the City of London!

In the City, the speculators and financial parasites have been pocketing a bonanza in bonuses running into many millions of pounds under Brown’s stewardship of the economy.

According to data published by the Office for National Statistics (ONS) yesterday, City bonuses paid at the end of the financial year in April were 30 per cent higher than in 2006. They amounted to a huge £14bn, more than half the national total of £26.4bn.

About a million people work in so-called ‘financial services’ (money manipulation and speculation) in Britain, but only the top executives of the financial groups will have pocketed bonuses running into millions. For example, a survey of hedge funds revealed that the two top directors of GLG Partners hedge fund in London, which manages £40bn, got bonuses of between £200m and £250m each.

Of course, these tax manoeuvres and the bonus bonanza in the City took place before the share price falls, bankruptcies of loan companies and banks, and the failure of private equity groups and hedge funds to raise money for their activities that rely on borrowing.

The high street bank, Barclays, is the latest to admit that it has lost ‘hundreds of millions of dollars’ in speculation involving trading in debt. It created debt-handling set-ups called SIV-lites for the German Sachsen LB bank that went bust last week.

The City bonuses bonanza was condemned by the General Secretary of the Trades Union Congress, Brendan Barber. He said: ‘These figures suggest that the fortunes of the City super-rich show no sign of abating while thousands of vulnerable workers languish on poverty wages.’

However, the union leadership has demonstrated that it has no intention of fighting the Brown government, that is imposing pay cuts on millions of public sector workers – nurses, local council workers, civil servants, postal workers, etc.

In addition, under this Labour government a generation of youth is weighed down by debt because they are simply seeking the right to a university education.

Now working class families are about to be hit by huge price increases in bread and meat because world grain prices are rocketing.

The frenzy of speculation and the huge bonuses pocketed by City bosses are an essential part of capitalism.

As Karl Marx and Frederick Engels noted more than 150 years ago in The Manifesto of the Communist Party: ‘For many a decade past the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeoisie and its rule.

‘It is enough to mention the commercial crises that by their periodical return put on its trial, each time more threateningly, the existence of the entire bourgeois society.’

It is clearly time for the working class to consign the City of London and British imperialism to the dustbin of history, and with it capitalism’s servants Brown and Barber.