Labor votes for Coalition’s billions in tax cuts for the rich

July 5, 2019
This image captures Labor's class betrayal: House of Representatives' vote on Morrison's tax package.

It is an image that captured Labor’s class betrayal on July 3, the first day of the new federal parliament.

A division had been called in the House of Representatives over the Coalition government’s bill for huge tax cuts, which will disproportionately benefit the rich, erode progressive income tax by making marginal tax rates flatter, and force more cuts to public health, education and welfare.

On one side sat the sole Greens MP Adam Bandt and independent MP Andrew Wilkie. On the other, Labor and Coalition MPs.

The tax cuts then passed through the Senate the following day, with only Greens senators voting against.

By voting for these cuts, Labor has once again betrayed the interests of working people, as have right-wing populist parties like Pauline Hanson’s One Nation, Katter’s Australian Party, the Centre Alliance and Jacqui Lambie Network.

The Australian Council of Social Service (ACOSS), the Grattan Institute and the Australian Institute had all warned that the Coalition’s tax cut plans were unfair and irresponsible, but these warnings were ignored by the Anthony Albanese-led Labor “opposition”.

The most unfair of the tax cuts are its third stage, scheduled for 2024. But the Scott Morrison government refused to split the bill.

According to a Grattan Institute study, these cuts will cost $18 billion once implemented in 2024. This totals more than Commonwealth funding for pharmaceutical benefits, universities, public schools or unemployment payments.

Meanwhile, 60% of the benefits will go to the top 20% of taxpayers.

ACOSS principal adviser Dr Peter Davidson warned that these “high-end tax cuts will put funding for essential services at great risk”.

The Grattan Institute report showed that, to pay for the “Stage 3” tax cuts, the government is banking on an unprecedented squeeze on funding public services and payments, with a lower growth in public spending than any government has achieved over the past 40 years.

Davidson said: “Already there are huge gaps in our essential services that are leaving people to struggle with out-of-pocket costs and huge delays.

“We have a housing affordability crisis, an ageing population, entrenched poverty among people who are unemployed and eye-watering childcare costs. We need to ensure we have the public revenue we need to face these challenges as a community.

“It’s about priorities. Do we want to give $11,000 a year in tax cuts to people earning $200,000 or do we want to fix the gaps in our services and ensure we can fund them into the future?”

Cassandra Goldie of ACOSS explained: “People earning $200,000 are among the highest 5% of income earners — they are high-income earners, especially when compared to people on the median wage of $55,000 a year, and people on Newstart, which is equivalent to about $15,000 a year.

“Newstart has not been increased in real terms for 25 years and at $40 a day it is condemning people to poverty instead of supporting them to get through tough times.”

In an article in the Canberra Times, The Australia Institute deputy director Ebony Bennett explained how the Coalition’s tax cuts would further erode progressive taxation.

Bennett wrote: “Back when John Howard was prime minister and the GST was introduced, the top marginal tax rate kicked in at $60,000 and 13% of taxpayers were in this top tax bracket.

“Now we are heading for a system where an apprentice earning just over $45,000 a year will be paying the same marginal tax rate as a CEO earning $200,000 a year.

“In fact, the latest tax statistics shows only about 3% of income earners will be in top marginal tax bracket. And it is high income earners who will benefit most from the income tax cuts, particularly the Stage 3(a) tax cuts, which will deliver $26 billion to people earning over $200,000 a year and benefit men almost twice as much as women.”

Bennett warned that the Morrison government’s tax cuts would reduce income tax revenue by $300 billion, on top of the billions in company tax cuts it has already passed. That lost public revenue, he said, will be turned into more cuts to education, health and welfare.

A June 27 Essential Research poll found that 78% believe that funding for education and health is more important that tax cuts for those earning more than $200,000.

There is no popular mandate for these tax cuts for the rich.

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