A jobs levy?

August 4, 1993
Issue 

A jobs levy?

Tax the majority, not the minority of super-wealthy people who live off company profits, dividends, and rent: this is the "solution" to unemployment that the ACTU and the ALP left are rallying behind. They are calling for a temporary levy of up to 1.5% on incomes above $27,000 to raise about $2 billion for job-creation programs. It would hit people on incomes of $27,000 for approximately an extra $400 a year and those on incomes above $50,000 about $750 a year.

Big business, supported by the government both financially — reduced company taxes — and politically — enterprise bargaining, attacks on the award system — goes merrily about restructuring industry so as to reduce the money it spends on wages and make people work harder for less. This restructuring means fewer jobs as new machinery is brought in, or simply as a result of fewer people working that much harder.

Last week, for example, BHP announced that it is building a new steel mill which, while requiring workers in the short term, will mean the closing down of two old mills and a reduction in the overall work force.

Meanwhile, "restructured" industry's profits go up. What about a tax on company profits, the very profits created as result of job shedding?

In any case, the scheme would operate as no more than a band-aid, and a scrimpy band-aid at that. The $2 billion raised would create at best some 30,000 temporary jobs. This would amount to no more than brief respite for less than 3% of the officially counted unemployed.

Wage earners, even if top wage earners are included, are not where the excess wealth is to be found. But by reversing Labor's reduction of the company tax rate from 49% to 33%, an extra $2.8 billion would be gained. By removing dividend imputation for the minority who own substantial

shares, $1.5 billion can be obtained. Even more could be gained by increasing the top marginal tax rate (already low by OECD standards), by reintroducing inheritance tax (above a threshold of, say, $200,000), by gift tax, etc.

Such tax reforms are desperately needed, especially in order to improve public services in the fields of education, health and public transport, all of which are deteriorating rapidly just as user-pay policies make them more expensive. Expansion of activity in this area would also create jobs.

But the real solution to unemployment would involve reducing the working week with no loss of pay. This would very quickly eliminate unemployment and would also redistribute wealth away from company owners and profits to workers and wages. Workers will have to fight for such a solution against the plans and ideas of employers and the government.

Employment minister Kim Beazley is urging workers to do the opposite: to shift to part-time work — a brazen call for allowing employers to reap all the benefits of higher productivity. Beazley also says that real job growth will come only with economic growth triggered by removing "constraints on the demand for labor" — i.e. bringing in lower wages and further cutting business costs. In short, workers have to pay for any reduction in unemployment with lower wages, poorer conditions, harder work and higher taxes.

The trade unions should reject the idea of taxing wages as a solution to unemployment or as a way of improving public services. The real solution is indeed industry restructuring, but by workers and the community in their interests, where the wages bill increases but the dividends and private profit bill goes down.

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