BLOG 5 - THE LLANITO SOCIAL CONTRACT

Last week we were treated to a display of courage and unity from our healthcare workers with the backing of UNITE, as they marched in great numbers through Main Street to protest the unacceptable working conditions that many GHA workers (and other subcontracted labour) are being subjected to. They also raised grievances about a plethora of bad practices that are common across the civll service, such as mismanagement, lack of freedoms and the general defunding of our public services.

I want to be very clear about what is happening here. We are witnessing the piece-by-piece privatisation of parts of our public services, particularly in the areas of care, and it is happening in the usual, GSLP style.

What does this mean? The GSLP privatisation model is mostly about control. It degrades workers' rights and creates business opportunities for their friends and allies, of course, but most importantly, it hides the fulfilment of important duties from public scrutiny by delegating them to satellite companies owned by party puppets. It is also not a new thing. This model has been going on since privatisation started in Gibraltar in the late eighties.

The implementation is simple. Defund a particular area by not replacing workers who retire, by not promoting workers acting in higher wage scales, by not providing adequate means or working conditions etc. When the service is close to breaking point, bring in one of your puppet companies to save the day, providing cheap, subcontracted labour on precarious contracts to “temporarily” fill in the holes. Use the threat that these workers (completely innocent parties in this situation) represent to intimidate and divide the workforce. Ah, of course, if you dare raise your voice and denounce these practices prepare to be called a traitor and a sell-out by Fabian Picardo’s ten-cent army of fakes and sycophants. Then, slowly but surely, what was once sold as temporary becomes permanent.

The end result? Worse quality services, worse employment conditions, limited value for money for the tax payer and more covert political control of our economy.

Many workers in Gibraltar today are experiencing working conditions of the kind that spurred enormous social backlash after the economic crisis of 2008. Back then it became the norm to make workers, particularly young people entering the workforce, bear the brunt of the economic downturn by giving them precarious, short term contracts that prevented them from ever accruing rights as workers; contracts that ended just before workers could be made permanent, zero-hour contracts, fake self-employment etc. Many European governments, suffocated by deficits, debt and a limited control over their monetary policy shamefully acquiesced to these practices. We have since gone from crisis to crisis, and the problem of precarious labour has become an endemic global problem they now call “the gig economy.”

Gibraltar didn’t suffer as badly as other jurisdictions in the crisis of 2008. In fact, places like Gibraltar saw opportunity within the chaos, and used their friendly tax regimes to attract business in what had become a global economic reshuffle. Unfortunately the boom-and-bust cycle is a key characteristic of capitalist economies, so it’s always just a matter of time before a crisis catches you…

Which takes us to today; the post-Brexit, post-Pandemic, warring 2022 and the 200-million-odd-pound-deficit that the Government has predicted for this year and the next, which is at the centre of the issues of privatisation that we are seeing today. Not any old crisis, but a perfect storm of high debt, slow growth, and now inflation.

In any case the fact is there is no money. If there was ever a real rainy day fund, we have spent it. If there was ever a real reduction of the national debt, we have raised it again. There is nowhere to go but make cuts, simple as that. Or is there? Well, maybe there is…

There are three ways a country running a deficit can balance its accounts. One is to cut spending, slashing the budgets of the most costly areas of public spending like health, education, pensions etc. Fortunately, these cuts tend to create great social upheaval as they impact greatly on those who depend on public services the most, this being the working classes. Another option is raising the national debt, something that, thanks to this Government’s irresponsible, decade-long spending spree, has now become an impossibility. In fact, last time we were able to do this was thanks to the UK acting as a guarantor for our loans. And then there’s the third option. The most fair, democratic and socialist (!) way of tacking stubborn deficits. By way of raising taxes.

Now I know what you’re gonna say: Not more taxes, please! Things are expensive enough as it is!

But don’t worry, at this stage a truly socialist Government would start by taxing those who are really in a position to help our community through tough times. Those who would not suffer hardship as a result of the increase. I’m talking about the most wealthy, those who have benefitted from the educated, orderly society we have created on the back of public spending over many decades, and who would now have the opportunity to give back some of those generous benefits. The US has just activated a tax plan that will affect only a tenth of the wealthiest 1% of Americans that will raise 360 billion dollars and will help the nation overcome these tough times of inflation and war. Joe Biden has personally promised that nobody making under 400k a year will be affected, only the highest peak of the pyramid of wealth and success.

So why is this not even in a discussion in Gibraltar, when it is being discussed everywhere else? It should be, in fact, the first port of call for any socialist party, whether in Government or in opposition. Fiscal justice they call it; asking those who make the most to contribute the most, particularly when times are tough. It is fair, it is economically sound (the money made by the super-rich does not tend to go into the economy, but into speculative investments or savings), and it generates equality and social cohesion, something Gibraltarians appreciate more than most things.

Well if you think that that’s a good way to confront the crisis we’re facing, then you’re a wrong. In fact, you’re a traitor, a populist, and you’re attacking the most sacred pillar of the Gibraltarian edifice. In the words of Nigel Feetham, our “low tax” regime, operated by millionaires for the benefit of millionaires, ardently defended by those with skin in the game, the holy grail for barristocrats who benefit directly from it, is untouchable.

When Nigel Feetham told you in his impassioned Viewpoint rant that Gibraltar has a “low-tax” model, he did not tell you the whole truth. He forgot to tell you that the model is a low-tax model for him and his friends, that is, the highest earners in our society. Gibraltar’s untouchable tax system works as follows: for individuals under the gross income-based system, taxes on earnings between £25k and £130k progressively go up from 16% up to 28%, which is not the highest income tax in the world, but it is not too far from other European nations. Gibraltar becomes “low tax” only when you make A LOT of money, which means that after £130k the progressive scale is turned on its head and starts going down instead of up. For the next £395k the rate goes down to 25%, for the next £200k to 18%, shockingly, for anything a local resident earns over £735k a year, they pay ONLY 5% in tax.

So if you’re an average Gibraltarian making, say, 30-40 thousand pounds a year, your tax rate under the gross income tax system would be something in between 18% and 20%. However, if you are one of the super privileged high earners and take home, say, two million pounds, your tax rate would be approximately 11%, much lower as a percentage of your income than a working-class earner. The more you earn, the less you pay as a percentage of your income; that’s how the system works.

And that, dear reader, is the way it is and the only way it can be. If you even try to open up a discussion about whether this system, with the many other drawbacks I raised in the last two blogs, is the best system to provide for the needs of our community, then you’re a traitor and a populist. If you dare introduce any concept of morality to the political discussion, you’re an innocent child. If you open up a conversation about taxation, perhaps the most substantial and important conversation an MP can have, you’re reckless. That’s the Gibraltar we live in. That is the democracy we have.

Then throw in the mix of course, the predictable next step attempt at being cancelled out by the gallery of Picardo sycophants because I have ‘benefitted’ or my father bla bla bla, for the umpteenth time, dragging a man out of his grave who died twenty-five years ago, just to create some sort of distance between him and his daughter and nullify her right to be introspective. That old chestnut… and ironically by an army of fake trolls and lawyers, working in the firm he founded.

Gibraltarians cannot even debate the possibility of introducing more fiscal justice in our system because the powers that be simply won’t allow the possibility of a discussion. We have to accept that the super-rich will pay peanuts while we see our public services slowly degrade and the job opportunities for our children evaporate. And be careful, because if anybody is going to feel the pinch of tax increases, it’s definitely not going to be the super-rich. In fact, Fabian Picardo has already said he might have to raise indirect taxes - the most unfair kind of taxes, as they impact everybody regardless of income. Raising indirect taxes would be another slap in the face to the working and middle classes in a community in which the super-rich already pay less tax than everybody else.

What I found most disappointing about Mr. Feetham’s Viewpoint extravaganza was that, as a society, we missed out on an opportunity to have an important and very interesting discussion. Instead of making a fanatical defense of an economic system that is just that, a system, with its pros and cons and its diverse considerations, he should have argued why and in what way this system is actually beneficial for all, and tackled the substance of my legitimate criticisms. He should have argued that, due to the influx of HNWIs our low taxes bring in more than they let go, and that public spending is here to balance out the injustices caused from taxing the middle classes more than the rich, for example. He did none of that, perhaps because it is becoming harder and harder to make these arguments in a Gibraltar that is becoming flooded with zero-hour contracts, where people are having serious trouble accessing housing and other basic commodities.

As I said in my previous blogs, Gibraltarians are not stupid. We have been accepting these injustices because, in what I like to call the “llanito” social contract, we accepted being a playground for the rich as long as our Government provided opportunities for all.

I suggest you ask the workers in the care sector what opportunity looks like in Gibraltar today. Trust me, it’s enough to make you want to march the streets in anger.

Speak soon,

Marlene