Literally millions of Australians in the firing line as Treasurer Scott Morrison continues his assault on the poor

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]

The Government for Billionaires and Bankers is saving money by screwing over the poor again

Worried that you soon may be unemployed and not feeling depressed enough by your situation yet? Well read on………

The Australia Institute, media release, 5 August 2016:

Cuts would push dole to record low under poverty line

New research released by the Australia Institute today shows that government moves to cut unemployment benefits will put recipients at 32% below the poverty line.

The research also highlights staggering inequality in Australia where the 10 richest Australian families have the same wealth as the poorest 3.9 million Australians combined.

"At the time of the Sydney Olympics, a couple on unemployment benefits had enough income to put them on the poverty line. They are now 26% below it,” Executive Director of The Australia Institute, Ben Oquist said.

“Unbelievably the government plans to actually cut unemployment benefits as one the first acts of the new parliament with the removal of the clean energy supplement for all new welfare beneficiaries.

“Despite years of work and reports arguing for the need to increase the dole - including from the BCA- the government is going to cut it by $8.80 per fortnight for singles and $7.90 each for couples, sending their income to an historic 32% below the Henderson poverty line.

The cuts would affect pensioners, the unemployed, students, people with a disability and carers.

The report shows the level of financial support for the unemployed has fallen sharply since the early 90’s and is now 30% below the poverty line.

Figure 1: Government benefits versus poverty line

“The Coalition’s position is contrary to the growing consensus across business and the community sector calling for income support to be increased, not decreased.

“Business groups, from KPMG to the BCA, recognise that unemployment benefits have reached such chronically low levels that it is diminishing opportunities to effectively bring people back into the workforce.

“But the Coalition seems intent on cutting Australia’s shamefully low welfare support. It’s cruel, out of touch and will not benefit the Australian economy.

The cuts would see a single pensioner hit for $366 dollars per year (see table 1).

Table 1: Rates of the clean energy supplement for selected government payments

Living Situation	Proposed cut
Newstart single, no children	$8.80
Newstart Single, with a dependent child or children	$9.50
Newstart Partnered	$7.90 (each)
Age pension single	$14.10
Age pension partnered	$10.60 (each)
Parenting payment single	$12.00
Parenting payment partner	$7.90

“In contrast, the pre-election budget gave tax cuts exclusively to the highest income earners.

High income earners were given a $315 a year tax cut in addition to those on more than $180,000 having the budget repair levy cut.

“A policy which gives more to the richest while cutting support for people below the poverty line will only increase inequality in Australia,” Oquist said.

Download Publication: 

 TAI Briefing Note - Poverty Line - August 2016.pdf

Australian Federal Election 2016: spot Amanda Vanstone's attempts at political deception in The Age newspaper

This was former Liberal Senator for South Australia and former minister in the Howard Government, Amanda Vanstone writing in The Age on 9 May 2016 in an article titled Turnbull or Shorten? The choice seems clear:

Let’s break that down a little.

Schooling

Yes, Malcolm Turnbull went to a public primary school at Vaucluse in Sydney’s affluent Eastern Suburbs for about three years and, yes he went to Sydney Grammar School from the age of eight with the assistance of a scholarship for at least part of that period. He graduated from university during the years when undergraduate and post-graduate tertiary education was free of course fees in Australia. He was the child of divorced parents. All this is on the public record.

Bill Shorten went to a local Catholic primary school before attending Xavier College’s junior & senior schools in the Eastern Suburbs of Melbourne – his mother taught at Xavier and presumably there was some degree of discount on his school fees. So yes, he also had a private education in affluent suburbs. He graduated from university during the years when tertiary education was free of course fees and undertook a post-graduate degree during a period when course fees were re-instituted. His parents divorced when he was about 20 years of age. All of which is also on the public record.

Wealth

Malcolm Turnbull inherited assets worth an est. $2 million from his hotel-broker father before he turned 29 years of age according to one of his biographers Paddy Manning and, he and his wife independently and jointly went on to garner considerably greater wealth which was last estimated to be in the vicinity of $200 million. His last Statement of Registrable Interests lists a veritable slew of financial investments and an expensive property portfolio shared between he and his wife. It is not known if he inherited any money from his mother.

It is not known to the writer if Bill Shorten inherited any money to speak of from his dry-dock manager father or his mother, however his last Statement of Registrable Interests lists very little in assets held by either he or his wife beyond their mortgaged family home.

What essentially separates these two men are the differences in their personal and political philosophies and the wide gap between their different levels of personal wealth.

Although this is something Amanda Vanstone is trying hard to distort in this federal election campaign and something The Age appears to be so indifferent to that its editor is not reigning in her excesses.  

Australian Federal Election 2016: the pain that awaits under a second Abbott-Turnbull Government

If there is a second term for this Abbott-Turnbull federal government it will be one characterized by high public debt and increased borrowings.

With a taxation revenue stream that has been deliberately limited by a $4 billion dollar giveaway to people whose level of earned income already cushions them from the realities experienced by average and low income households and, a further $48.4 billion hit to the revenue bottom line so that government can cut the company tax rate of an est. 2.121 million businesses - 70 per cent of whom don't paid the full rate anyway.

To keep their ship afloat Turnbull & Co would need to implement all those punitive Abbott-era cuts that were predominately aimed at working class households.

Which means among other things, an extension of the 2013-14 indexation freeze on Medicare rebates paid to specialist doctors, GPs and allied health professionals in an attempt to force them to pass on the shortfall to patients as a co-payment. As well as the introduction on 1 July 2016 of upfront payments for x-ray, imaging and pathology services.

Eligibility for Family Tax Benefits will be tightened and government paid parental leave payment rules will be changed to exclude more mothers.

The regressive Good & Services Tax (GST) has also been broaden so that from 1 July 2016 goods purchased overseas via the Internet will attract this tax.

From September this year anyone 22 years and over applying for Newstart Allowance will receive payment at a lower rate - each fortnightly cash transfer for a single unemployed person (with no children) will be $8.80 less and for unemployed couples (with no children) it will be $15.80 less. 

This means that a single person eligible to receive Newstart who applies in September will only have an est. $259.40 per week on which to live and look for work, while couples will only receive an est. $468.50 each week. With average rents in the Sydney metropolitan area ranging between $500-$530 at the beginning of this year, rental stress is likely to increase in unemployed households.

Liberal and Nationals federal politicians are denying that they are conducting "class warfare" yet large tax cuts are going to the top 25 per cent of income earners and will eventually will be extended to businesses with annual turnovers in the billions of dollars, while the economically and socially vulnerable are told they deserve less.

Indeed spatial demographics demonstrate the Coalition's further widening of social and economic division in this country.

On 6 May 2016 The Age revealed that the biggest proportion of income earners who will benefit fully from these personal income tax cuts are in Prime Minister Turnbull's high socio-economic status electorate of Wentworth, where more than a third will have more in their pockets after tax. With the western Sydney electorate of Fowler having the nation's lowest proportion of taxpayers who qualify for the tax cut. In its suburbs of Liverpool, Cabramatta and Green Valley, just one in 20 earners have a taxable income higher than the new tax threshold.

While The Guardian on 7 May reported that, in the relatively lower socio-economic status regional electorate of Page on the NSW Far North Coast, 94.2% of taxpayers would miss out on that same cut in the tax rate because their taxable income was below $80,000 a year. Similarly, neighbouring Richmond and Cowper electorates would see 92.3% and 94.0% respectively missing out on the tax cut.

A brief look at what to expect..........

Parliamentary Budget Office, 10 March 2016:

Unlegislated measures carried forward in the budget estimates—February 2016 update. Date issued: 3 February 2016. Date revised: 12: 30pm, 10 March 2016

The Sydney Morning Herald, 2 May 2016:

The first Turnbull budget will be propped up by about $13 billion of so-called "zombie measures", which are still on the books from the first and second Abbott budgets but have not yet been passed by the Senate.

A parliamentary budget office count for the coming financial year puts the "ghost" measures at $1.7 billion. The biggest are the $600 million from planned cuts to access to Family Tax Benefits, $258 million from the outlawing of alleged double-dipping of maternity leave schemes, and $139 million from increasing co-payments and changing the safety net for the Pharmaceutical Benefits Scheme.

2016-17 Budget Papers, Statement 6: Debt Statement, Assets and Liabilities, 3 May 2016:

Net debt is expected to be $326.0 billion (18.9 per cent of GDP) in 2016‑17. Net debt is projected to peak at 19.2 per cent of GDP in 2017‑18, before declining over the medium term to a projected 9.1 per cent of GDP ($264 billion) in 2026-27.The end-of-year face value of Commonwealth Government Securities (CGS) on issue subject to the Treasurer's Direction [government borrowing] is expected to be $497 billion in 2016‑17 and is expected to increase to $581 billion in 2019-20. By the end of the medium term (2026‑27) the total face value of CGS on issue is projected to rise to $640 billion.

2016-17 Budget Papers, Statement 4: Revenue, 3 May 2016:

The 2016-17 Budget forecasts for tax receipts, excluding new policy, have been revised down since the 2015-16 MYEFO by $4.6 billion in 2016-17 and $13.5 billion over the four years to 2018-19. Excluding GST, tax receipts are forecast to be $4.6 billion lower in 2016-17 and $14.2 billion lower over the four years to 2018-19…..

the forecast for nominal GDP has been revised down by $27.5 billion over the four years to 2018-19….

In 2016-17, tax receipts as a share of GDP are expected to be 22.2 per cent, lower than the 2015-16 MYEFO estimate of 22.5 per cent.

Financial Review, 3 May 2016:

The government will spend almost $4 billion over the next four years to stop 500,000 taxpayers moving into the second-highest tax bracket…..

2016-17 Budget Papers Part 1: Revenue Measures, 3 May 2016:

The GST will be extended to low value goods imported by consumers from 1 July 2017….

The intent of this measure is that low value goods imported by consumers will face the same tax regime as goods that are sourced domestically.

Overseas suppliers that have an Australian turnover of $75,000 or more will be required to register for, collect and remit GST for low value goods supplied to consumers in Australia, using a vendor registration model.

The Guardian, 4 May 2016:

Asked about the plan to increase the threshold at which the 37% tax bracket kicks in from $80,000 to $87,000 – a tax cut of a bit over $300 a year for the top 25% of earners – the prime minister, Malcolm Turnbull, told ABC radio that even if it was not legislated when he called the federal election at the end of the week it would be implemented "administratively".

The Sydney Morning Herald, 4 May 2016:

On Tuesday the federal government announced it will increase the tobacco excise by 12.5 per cent a year for the next four years.

The plan will cause the price of a packet of 25 cigarettes to rise to about $40, up from $25 today.

ABC News, 5 May 2016:

Prime Minister Malcolm Turnbull has refused to confirm the 10-year cost of the proposal to cut tax for all firms to 25 per cent over a decade.

The Parliamentary Budget Office (PBO) has estimated the proposal, which will be phased in over time and benefit small and medium-sized businesses first, will cost $16.5 billion a year in 2026-27. However, during an interview with Sky News, Mr Turnbull would not confirm that figure, despite being asked more than a dozen times for an explanation.

The Australian, 6 May 2016:

Treasury has revealed a hit to revenue of $48.2 billion over 10 years from the Coalition’s plan to cut company taxes….

The government policy starts by cutting the company tax rate to 27.5 per cent to all companies with a turnover of up to $10 million, taking effect from July….

will be extended to bigger companies year by year, followed by several years of cutting the overall rate to 25 per cent for all companies.

The Sydney Morning Herald, 7 May 2016:

Anyone who signs up for welfare from September 20 will get less than those already on it, creating a two-tiered payments system…..

The government is removing an "energy supplement" 
Newstart Allowance payments have steadily decreased in relative terms over the past two decades to less than 40 per cent of the minimum wage……

The cut comes as national youth unemployment is nearly 13 per cent.

Centrelink, 7 May 2016:

Payment rates for Newstart Allowance…..

single, no children $527.60 [per fortnight]

[couple] $952.80 [per fortnight]

The “Your Guide To” Series: Newstart Allowance, July 2015:

[Newstart non-indexed] Rates include Energy Supplement of $8.80 (single, no children), $7.90 (each member of a couple) and $9.50 (single with children or over 60 after 9 months) per fortnight.

ABC News, 14 January 2016:

The typical Sydney unit rent was $500 a week, while a house was $530 in December 2015.

Royal Australian College of General Practitioners, May 2016:

14 May 2013 Suspension of MBS rebate indexation until 1 July 2014 to align indexation with financial year, announced in 2013-2014 Federal Budget.

13 May 2014 Indexation freeze for specialists, allied health professionals, nurse practitioners, midwives and dental surgeons MBS and DVA rebates until 30 June 2016, announced in 2014-2015 budget.

1 July 2015 Rebate indexation freeze commences…..

The Federal Government is reducing its investment in your healthcare by freezing your Medicare rebates. This means your Medicare rebates will remain the same until 1 July 2018, despite the cost of services increasing. The freeze is a co-payment by stealth and the Government has implemented this measure to reduce the amount it spends on all Medicare subsidised services, including general practice services. ….

Practices where a large proportion or all services are bulk billed will be significantly affected. The rebate freeze will have a detrimental impact on the viability of the practice. These practices may need to consider introducing or increasing out-of-pocket expenses to ensure the sustainability of the practice.

Individual GPs employed by a practice may be asked by their practice to pay a larger service fee to cover increasing practice costs.

Patients will experience a reduction in the value of their MBS patient rebate over time. 

The impacts will be magnified for GPs and practices providing patient services in lower socio-economic areas, where a majority of patients are from vulnerable groups (such as pensioners, Aboriginal and Torres Strait Islander peoples and people on very low incomes.). Many people in these areas cannot afford to meet out-of-pocket costs for care.