Max O.
After
massive community opposition to the Coalition's 2014 budget the Senate majority
wisely decided to oppose the $24 billion spending cuts to social welfare. The
two stand out measures that the Government couldn't implement last year were
reductions to the age pension and introduction of the GP co-payments.
Unable
to force through the savage budget cutbacks that the Business Council wanted,
Treasurer Hockey has now changed tack with his language from the aggressive
“budget emergencies” and “ending the age of entitlement” to the more reassuring
tones of "fairness" and "jobs for families".
Some 'choice bits' under assault from the
2015 Budget
However
this new rhetoric attempts to camouflage their spurious claims of assisting
families but which are in actual fact another round of attacking the poor,
workers and their families. The Government asserts that their proposed changes
to childcare rebates will see families who earn between $65,000 and $170,000 a
year, $30 per week better off.
However
this is a sleight of hand. The rebate will cost around $3.5 billion but will be
paid for by cuts to the family tax benefits which amount to $5 billion.
The
Coalition has stated that this new rebate is on the proviso that the Senate
accept their cuts to the family tax benefits. This will see payments to
families stopped once a child reaches age 6 instead of the previous cut out age
of 16; a reduction by as much as $6000 per year for lower-income earners.
To rub
a bit more salt into the wounds of hurting families, parents will have to
undergo a workforce activity test to be eligible for the full rebate. A
definite attack on single parents, who in the main are women.
Women
who secured paid parental leave in their workplace agreements will now lose
access to the existing Government paid parental scheme from July, 2016. The
Coalition ferociously demonises this once legal entitlement to access both
private and government parental leave with the blame speech of
"rorting" and "double-dipping"; a measure that will save
the budget over the next 4 years $968 million.
The
unemployed is another section of the community that the Government still wishes
to victimise. It is an indictment of the capitalist system that unemployment
exists at all.
In fact
capitalism always operates on basis of having a reserve army of unemployed, it
cannot guarantee nor does it want to achieve full employment. This keeps labour
costs down and curbs militancy on the job.
Even though
the Government has backed off from last year's scheme for a 6-month wait before
school leavers can receive unemployment benefits, they still propose a waiting
time of one month. Job seekers under the age of 30 will be required by the new
"Work for the Dole" scheme to complete 25 hours per week of work for
the dole or another “approved activity” for six months each year.
The age
pension will not suffer the original plan to cut indexation rates, but the
government will now impose assets tests (set previously at $1.15 million to a
$823,000 limit) to refuse pensions to greater numbers of retired people. This
will see 91,000 lose the age pension and 235,000 suffer a pension reduction, a
saving to the budget over the next 4 years of $2.4 billion. Abbott and Hockey
parrot the Business Council's ideology that the pension should not be seen as a
retirement entitlement but only as a protective measure.
As much
as the government boasts about cutting taxes it is relying on bracket creep,
where PAYE tax payers are pushed into higher income brackets as a result of
wage increases and inflation, to supply 80 percent of their increased revenue
over the next four years. This will see the average income tax rise from 21.7%
to 27.4% over the next ten years and is the main method of eradicating the $35
billion budget deficit within four years.
Buying off Small Business with "Get out
there and have a go!" tax bribe
With
ironic opportunism the government in this year's budget has presented small
business and contractors with $5.5 billion worth of tax concessions, after
previously overturning Labor's small business instant asset write off tax
deductions.
This
small business package is Hockey's showpiece to achieve 'economic growth and
job creation', and to buy votes at the next Federal election. On offer are tax
write-offs up to $20,000 for equipment purchases to the 780,000 businesses who
have turnovers of less than $2 million a year and a tax rate reduced from 30%
to 28.5%.
Small
businesses that spend up to the $20,000 limit will be able to claim an
unlimited number of tax deductions over the next two years. However 'tradies'
who rush out to spend may inadvertently lift their output and push themselves
over the $2 million a year threshold and automatically lose the $20,000 write-off.
Interesting figures from The Australia
Institute
The
Australia Institute (TAI) argues in a document entitled It's the revenue stupid: Ideas
for a brighter budget, "... that 70 per cent of the budget deficit
is caused by a fall in revenue and 30 per cent by an increase in spending. In
other words the budget is not collecting enough tax while increased spending is
only impacting on the budget in a relatively minor way."
In
order for the government to: firstly, "reduce the budget deficit by
billions"; secondly, "make savings progressively with those with the
most ability to pay paying the most"; and thirdly "make savings
efficiently, minimising market distortions and in some cases correcting
distortions already in the market", TAI recommends eight policy solutions.
TAI has
put forward two different types of revenue proposals. The first are fully
modelled and costed policy changes. They include;
-
Changes to super tax concessions
-
Restrictions on negative gearing
-
Scrapping the capital gains tax discount
-
Introducing a Buffet rule (minimum average tax rate on high income earners)
The
monies raised by this policy approach:
Revenue measures Estimate of revenue raised
($m)
Super
tax concessions $9,616
Restrictions
on negative gearing $3,491
Scrapping
the capital gains tax discount $4,039
Introducing
a Buffet rule $2,492
"If
these four policies were introduced they could raise up to $19.5 billion
dollars a year, the majority of which would come from high income
households."
The
second are revenue measures that have not been modelled. They include;
-
Banking super profits tax
-
Financial transactions tax
-
Estate tax
- Restricting
fossil fuel subsidies
The
monies raised by this policy approach:
Revenue measures Estimate of revenue raised
($m)
Bank
Super Profits Tax $5,700
Financial
transaction Tax $1,000
to $1,400
Estate
Tax $5,000
Restricting
fossil fuel subsidies $11,517
"These
options have not been modelled to the same degree of detail as policy options
such as negative gearing and capital gains tax, superannuation tax concessions,
and the Buffett rule. As such, these are offered not as fully-costed policies
but as an illustration of the wide range of options available to Treasury, each
of which must be preferred to spending cuts on services disproportionately
relied-upon by low-income households.
The case for a super profits bank tax and
ending tax concessions
Recent
profit figures for each of "...the big four banks in the table below have
seen these banks earn pre-tax profits of $41 billion or an average return on
equity of well over 20 per cent. Super profits worth some $18 billion are
generated by the big four banks."
Profit of the big four banks in Australia
Bank After tax ($m) Before tax ($m)
ANZ $7,283 $10,308
Commonwealth
Bank $8,650 $11,997
National
Australia Bank $6,802 $7,955
Westpac
$7,625 $10,740
Total $30,360 $41,000
"Tax
concessions are worth $11.5 billion to the firms who claim them. Business lobby
groups generally try to down play the importance of tax concessions. It is not
hard to see why given the size of some of these tax concessions."
Selected tax concessions
Subsidy Year Subsidy amount ($m)
Fuel
tax credits 2015-16 $6,822
Concessional
rate of excise levied on aviation
Gasoline
and aviation turbine fuel 2015-16 $1,310
Excise
concession on ‘alternative fuels’ 2015-16 $450
Statutory
effective life caps 2015-16 $1,930
Capital
works expenditure deductions 2015-16 $1,005
Total ($m) $11,517
The
above figures and information gathered by TAI powerfully argues the case that
the rich and corporate world could quite easily and should be made to pay down
the Federal Government budget deficit.
Banksters are the predators and winners of
government debt crisis
Government
budget deficits are the consequence of permitting large corporations tax
minimisation scams, low company tax rates and a plethora of government subsidies.
PAYE taxpayers, who are considered responsible for the social welfare component
of the budget, are then automatically blamed for causing government debt.
The
cheaper option of taxing the corporations and banks rather than borrowing from
them, with the accompanying interest, is never considered! Lenders demand that
capitalist governments cut social spending, sell off state assets or tax
workers to service their public debts.
Banks
being the biggest lenders to governments are the major beneficiaries from
government debts. It is a bonanza for them.
This
credit/debt crisis encouraged by the banks induces governments to temporarily
borrow their way out of their debt problems. When the government net
debt-to-revenue ratio is seen as getting too big and becoming a risk, at the
instigation of the IMF and credit ratings agencies, lenders demand higher
interest payments or refuse to lend more.
Their
panacea of cut backs on social spending, sell off/privatisation of state assets
and finally raising taxes on the working class only exacerbates the economic
crisis they brought about in the first place.
