On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the Government than contributors - never paying more tax than they receive in government payments.
There is a new divide – the taxed and the taxed nots. [Australian Treasurer & Liberal MP for Cook Scott Morrison, Bloomberg address, "Australia must take action to strengthen our economic resilience", 24 August 2016]
John Passant* writing in Independent Australia on 29 August 2016 is not impressed by Scott Morrison:
THE one sided class war continues. Only the words have changed.
Under Abbott and Hockey it was "lifters and leaners" and "ending the age of entitlement".
The "logic" behind this rhetoric gave us the horror Budget of 2014 and its proposed $80 billion in cuts over time to public health and public education.
Public opposition to that Budget was widespread, and angry. The Abbott Government never recovered and the 18 months of negative polls and the prospect of a Liberal wipe-out at the election, saw Malcolm Turnbull take over and win a bare one seat House of Representatives majority and an unpredictable Senate in the July 2 election.
Treasurer Scott Morrison has found some new weasel words to try to disguise the class war he is leading against the poor, pensioners, the sick, the unemployed and low paid workers.
After years of denying it Morrison has admitted we have a revenue problem, although he called it an "earnings" problem. According to Morrison, the great divide in Australian society is between the taxed and the taxed-nots.
In ScoMo world it is "the taxed" who have been bearing the burden of Budget repair while "the taxed-nots" have been bludging off us. Time for the taxed-nots to pull up their socks and start contributing to fixing the Budget problem.
Just who do Morrison and Turnbull have in mind as the taxed-nots? Could it be the 676 big businesses (36% of the group) which, according to the Commissioner of Taxation’s corporate tax transparency report, paid no income tax in 2013-14? Not on your life.
Could it be the likes of Don Argus – former Bank of America chairman – and his wife with their tax free pension of $1.2 million a year? Not on your life.
Could it be the 56 millionaires who pay no income tax? Not on your life.
Morrison’s prescription for the earnings problem is not to tax big business and the rich but to cut welfare payments to those who most need them — the sort of people he and others claim pay no tax.
As Duncan Storrar, in replying to one accusation that he pays little or no tax, said on ABC's Q&A:
“I pay tax every time I go to the supermarket. Every time I hop in my car.”
In fact, as I have written previously for IA:
Analysis from NATSEM, contained in the ACOSS report on inequality, shows that Australia’s tax take (including GST as well as income tax) across various income quintiles fluctuates around 25%, with those on lower incomes as a generalisation a bit below and those with higher incomes a bit above that figure. However, it gets worse when we compare the two ends of the income spectrum. The bottom 5% pay 34.2% of their income in taxes while the top 5% pay 30.1% in tax.
In other words, Australia does not have a progressive tax system.
Morrison also argued that there were millions on ‘welfare’ who paid no net income tax. By this he means that the government payments they receive are greater than the tax they pay.
Let’s be clear about this. The sort of people Morrison has in mind – and in his sights – are pensioners, the unemployed, students, the disabled, the homeless, those women fleeing domestic violence, the low paid and the list goes on.
Among these groups, the main people who pay little tax and receive much more in payments and other benefits from government are pensioners — all 2.4 million of them….
Read the full article here.
* John Passant is a former Assistant Commissioner of Taxation in charge of international tax reform in the ATO.
New Matilda, 30 August 2016:
“The new divide – the taxed and the taxed nots”
Here was an opportunity to state categorically that we need to increase our taxes, and to make those who are well-off pay their share. Instead we have been presented with a rambling discourse, dominated by his claim that there is a large proportion of Australians who “go through their entire lives without ever paying tax”.
That is plain wrong.
This year the Commonwealth is budgeted to collect $59 billion in GST, and $25 billion in excise and customs duty on tobacco, fuels and certain imports. That’s around $9,000 a household, in taxes that are practically impossible to avoid. Not even a Carmelite nun can avoid the GST.
And that’s before we consider state taxes such as drivers’ licences and car registration fees, and state and local government property taxes paid directly by homeowners or by tenants through their landlords.
Most of these taxes are regressive. The lower one’s income, the higher is the proportion of that income devoted to consumption and therefore to paying the GST, and the registration fees for a Corolla and a Porsche are pretty much the same.
That’s not to mention road tolls, private health insurance, fees at government schools and higher co-payments in health, all of which are high-cost privatised means of paying what we could be paying more fairly and efficiently through our taxes.
Morrison reluctantly admits that Australia has a public revenue problem, but he fails to acknowledge the yawning gap between what we presently collect in taxes and what we should be collecting if we are to fund adequately the public goods and a social security system appropriate for a high income country.
Our tax collections, as a percentage of GDP, are close to the lowest of all OECD countries – among prosperous developed countries only the USA collects less tax, and contrary to partisan spin, our taxes are falling.
Over the early years of this century Commonwealth taxes were around 24 per cent of GDP, before plummeting to 20 percent during the GFC and recovering to only 22 per cent now.
Read the rest of the article here.
NOTE
The Australian Goods & Services Tax (GST) taxes the final consumer of a good or service. Most unprocessed and raw foods as well as most education, childcare and medical services are GST exempt. The current GST rate is 10 per cent of the retail cost of goods and services and this tax is paid by est. 23.96 million people living in an est.10 million households. This tax is not included in government calculations of how much net tax is paid by any individual after government pensions/benefits/tax concessions received are deducted. Low income individuals/households pay proportionally more GST that middle and high income individuals/households.
[The Conversation, 24 July 2015]
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