Yet again, the federal Coalition government has launched a broadside in favour of its plan to cut company tax for big corporations from 30% to 25%, while slashing spending on social welfare and the public sector.
The catalyst for the latest controversy on the issue was a February 14 article on the ABC website by chief economics correspondent Emma Alberici, entitled, “There's no case for a corporate tax cut when one in five of Australia's top companies don't pay it.”
“There is no compelling evidence that giving the country’s biggest companies a tax cut sees that money passed on to workers in the form of higher wages,” Alberici wrote.
“It's also disingenuous to talk about a 30% rate when so few companies pay anything like that thanks to tax legislation that allows them to avoid paying corporate tax. Exclusive analysis released by the ABC today reveals one in five of Australia’s top companies have paid zero tax for the past three years.
“It’s been 10 years since the Australian budget was last in surplus. With a debt of more than $600 billion, many are questioning the merits of prioritising a $65 billion giveaway to big business in the form of a tax cut.”
Alberici’s analysis is spot on and it unleashed a firestorm of criticism from conservative politicians, right-wing economists and media pundits.
Government and business leaders wasted no time in lambasting Alberici and the ABC, with Prime Minister Malcolm Turnbull describing it as “one of the most confused and poorly researched articles I have seen on this topic on the ABC's website”.
Two days later, Alberici’s article was gone from the national broadcaster's website.
Business Council of Australia chief executive Jennifer Westacott complained of an “ideological hatred” of corporate Australia sweeping across the country. Preparing, along with other business and political leaders, to accompany Turnbull on his overseas trip to meet US President Donald Trump, Westacott said the US is “an open-for-business country, while we have become a business-bashing, closed-for-business country”.
The worldwide neoliberal capitalist offensive, which began in Australia in the 1980s under the Bob Hawke-Paul Keating Labor government as part of the international capitalist class war against workers, has continued to this day, under both Coalition and Labor governments.
Under this offensive, profits have soared, while wages have flatlined and overall inequality in society has risen markedly. The current Coalition government, under both Tony Abbott and Turnbull, has now accelerated the attacks on union rights and workers’ wages, while boosting corporate profits to the skies.
Unions are under constant assault, penalty rates have been cut, and social welfare spending has suffered a steady decline over the past two decades. No wonder a widespread “ideological hatred” of big business and its government agents has grown stronger in recent times.
The ACTU is currently seeking to harness this growing public hostility to big business with a publicity campaign calling on US global oil giant ExxonMobil to pay more tax. Radio ads and billboards proclaim “You paid tax, but Exxon didn’t”.
ACTU secretary Sally McManus said: “If reduced company tax is supposed to drive wage increases, then workers at companies like Exxon should be seeing massive wage increases, but the opposite is occurring. Exxon is cutting working people's wages, while paying no tax.”
The argument by the Turnbull government that a tax cut for big business will lead to more jobs and higher wages — otherwise known as the “trickle-down effect” — is a fairy tale. Companies just pocket the higher net profits and pay out greater dividends to their major shareholders or invest in labour-saving technology.
As part of an overall program to tackle inequality in this country, the Socialist Alliance favours a radical overhaul of the taxation system, from top to bottom. Company tax should be immediately returned to 49%, its level until the Hawke-Keating Labor government began cutting it in 1988.
The Australian Taxation Office needs to have the power to enforce that rate and crack down effectively on tax evasion by the big corporations.
A genuine progressive taxation system would include: getting rid of the regressive GST; a rise in the top marginal income tax rate; and a cut in tax rates for lower and middle income people.
It would also involve a stronger capital gains tax and the end of negative gearing on investment housing. These measures, combined with substantial increases in levels of social welfare payments, especially the miserably low unemployment benefit, would start to redistribute the enormous wealth accumulated by the super-rich 1% and consolidated through the current unfair taxation system.
Let’s unite to demand: “Tax big companies, not workers and the poor”.
[Jim McIlroy is a member of the Socialist Alliance.]