ATO

The great tax hypocrisy

Mining Tax – B.A.D.

Carbon Tax– B.A.D.

Goods and Services Tax – G.O.O.D.

Apparently the Mining Tax was a travesty – whoever heard of the richest individuals of the nation, and large mining companies, targeted by a tax to contribute to the welfare of the nation?!

The Carbon Tax was downright evil – whoever heard of something that increased the cost of living in an attempt to preserve the planet in a state suitable to support human life in the long-term?!

The Goods and Services Tax (GST) is fantastic – we should raise the rate, or broaden the base, or both!

What do you mean it would increase the cost of living and have the most impact on those who are on the lowest incomes?! That’s champagne and latte sipping socialist, liberal talk!

Apparently the ‘Axe the tax’ battle cry only applies when corporations, or the very wealthy, are being taxed, or the tax is socially responsible.

The Mining Tax debate was reduced to an economic Armageddon campaign, predicting the wipe out of Australia’s resources industry and catastrophic job losses. It was a left-wing, ‘tax the rich’ class war.

This from an industry that receives an estimated $2 billion a year diesel fuel rebate from taxpayers …

By the time the Mining Tax was implemented, it was so watered down, it had no chance of raising tax revenue of any significance.

In any event, its repeal was a focus for the incoming conservative Coalition government.

ATOThe Carbon Tax debate was reduced to a cost of living scare campaign and threats of industrial cities being wiped off the map, with the environmental and social utility disregarded, and the science highlighting the need for it denigrated and ignored. It was socialism masquerading as environmentalism.

Its repeal was another focus for the Coalition.

Now, the GST debate has a single-minded focus: revenue.

An increase in the cost of living is suddenly not a concern. No one seems to care about the modelling showing it would be the poorest households that are hit hardest.

The modelling released in October by the National Centre for Social and Economic Modelling shows that under the various scenarios being proposed:

  • annual GST revenue could be increased by up to $29.4 billion – fantastic news for governments, Federal and State; but
  • its effect would be felt most in the lowest income households, on average eating up twice as much of their disposable income than of households on the highest incomes.

The GST is an inherently regressive tax because it hits hardest those in the community who spend a larger proportion of their income each month on their living expenses.

The households that do so are the ones on the lowest incomes, many often living from month-to-month. The lowest income households spend 13.4% of their disposable household income compared to only 5.9% by those in the highest income households.

Including education and health in the tax base would have particularly far-reaching consequences – the equity and fairness implications would be massive. The government is currently indicating it has no intention of doing so, despite the idea being floated around and modelled.

Of course there are also talks of compensating lower-income households for their increased share of the GST burden. However, that would inevitably lead to a drop in the estimated increase in tax revenue, and further complexities in our already overwrought tax system.

Curiously there is little to no practical government consideration of, or tangible action on, other methods of addressing Australia’s tax revenue issue, such as revisiting:

  • laws providing for legitimate corporate tax avoidance schemes, estimated to cost tens of billions in lost tax revenue; or
  • the use of tax shelters by wealthy Australians to legally reduce their tax obligations at home.

In conclusion, as long as a tax proposal mostly affects the poor, and doesn’t help the environment in any way … it’s all good for Australia.

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