Malcolm Turnbull has delivered another budget for big business and the rich.
The Coalition is handing out personal tax cuts in the hope of boosting their popularity. But their plan was quickly exposed as unfair.
Most of the benefits will go to the wealthy. The bulk of the tax cuts, to be delivered in stages over seven years, go to high income earners.
Lower and middle income earners get at most a $10 a week tax cut.
But the government’s plan for a “flax tax” will eventually see everyone earning between $41,000 and $200,000 paying the same rate of tax. That means a cleaner on just above the minimum wage would have the same tax rate as a CEO.
This is an idea straight out of the market fundamendalist right-wing in the US.
It would make the tax system less progressive and increase inequality. Once it is fully implemented from 2024, the top 20 per cent of income earners get 60 per cent of the benefits.
The Coalition has cut $17 billion from schools funding over ten years and cut $715 million from hospitals through to 2020.
Yet it would rather throw $140 billion over ten years at tax cuts that mostly benefit the rich.
And the Liberals are still pushing tax cuts for big business worth $80 billion over the next ten years. An obscene $17 billion of that will go to the big four banks.
Treasurer Scott Morrison’s pledge to maintain tax at 23.9 per cent of the economy only reveals the Coalition’s commitment to neo-liberalism. It means holding down spending on health, education and welfare in order to cut taxes on the top end of town.
There has been an unexpected surge in tax income over the last year meaning the government has money to spend. Yet it still refuses to increase Newstart payments, which at $40 a day are impossible to live on. They have now dropped to less than 40 per cent of the minimum wage.
The Business Council of Australia and even John Howard have criticised the payment as too low.
They have also maintained last year’s cut to the energy supplement for pensioners, which will cost a single pensioner $365 a year.
And the government also went out of its way to deliver a series of nasty cuts. Migrants will now have to wait four years after they arrive in the country to access any welfare payments.
This will save just $200 million, a fraction of the $13.4 billion it is spending on income tax cuts in the same period.
It is also cutting funding to the ABC by a further $84 million. Yet it could find $49 million to fund a new monument to Captain Cook.
Labor has promised to double the tax cuts for low and middle income earners, and oppose the other parts of the Liberals’ plan targeted at the wealthy.
Alongside this Bill Shorten repeated his promise to offer more funding than the Liberals for hospitals and schools.
But Labor could not bring itself to promise to increase Newstart. Despite acknowledging it is too low, it has simply proposed a review if Labor forms government.
The Greens have put forward a bill for an immediate $75 a week increase.
Shorten is also trying to appeal to big business, accusing the Coalition of increasing government debt and promising to, “pay down national debt, faster”.
Shadow Treasurer Chris Bowen says the Coalition’s return to surplus next year is only “wafer-thin” and that, “We need a government prepared to take the tough decisions to return the budget to surplus and healthy, sustainable, ongoing surpluses”.
Labor says it can deliver a larger budget surplus thanks to tax increases on the rich through reducing negative gearing on property, increasing tax on the top 2 per cent of income earners and family trusts, and reforming dividend imputation.
Bowen told the Press Club that the majority of money “raised from our revenue measures over the medium term will go towards budget repair and paying down debt”—not spending on services.
If the economic situation worsens, Labor’s promise to deliver surpluses could also require cuts to spending. We saw what this meant when Julia Gillard was in power, when Labor cut university spending and payments to single parents.
Corporate profits are at record levels yet inequality is at a 70 year high. Labor should be talking about increasing the corporate tax rate, not just stopping Turnbull’s cuts.
And at least a third of the biggest companies each year avoid corporate tax completely.
Labor’s reduction in the negative gearing and capital gains tax rorts for property investors is also modest.
Our cities are straining due to lack of spending on public transport and basic infrastructure, hospitals and schools are struggling to cope and we urgently need to fund a transition to renewable energy.
It’s time to get serious about taxing corporations and the rich to boost government spending for the services we need.
By James Supple