Federal Treasurer Scott Morrison has ramped up calls for tax cuts to big business in an October 24 speech to launch the Productivity Commission's latest report.
Morrison claims corporate tax cuts are "an urgent matter" now that conservative governments in the United States, Britain and France are moving to slash big business taxes. Australia risks becoming an "uncompetitive tax island" if it does not follow suit, Morrison claimed.
However, as Greg Jericho points out in an October 19 article in the Guardian: "The desire to cut company tax is founded on the belief that [Australia is] uncompetitive with other nations and that we need to do something to arrest the fall in investment.
“And yet when looking at the actualities of our company tax system, we are not a high-taxing nation, and overwhelmingly the fall in investment is due to the end of the mining boom, not because other nations have lowered their tax rates and taken investment away...
"And that's the ultimate problem of the desire to cut [the] company tax rate – it is unlikely to lead to the benefits those proposing it insist will occur, but it will reduce revenue – and that will need to be paid by someone.
“And as the Parliamentary Budget Office [has shown], right now that someone is people on middle incomes."
These glaring facts on tax were amplified in an October 11 Guardian article by Gareth Hutchens: "The government's plan to return the budget to surplus is heavily reliant on personal tax increases across every income bracket, but hitting middle-income earners hardest, the Parliamentary Budget Office has revealed.
"Middle income earners (with an average taxable income of $46,000) will experience the highest average tax increases of any income quintile, jumping 3.2 percentage points, from 14.9% to 18.2% over the next five years.
"The PBO's paper, released on [October 11], reveals for the first time how the Turnbull government's projected budget surplus in 2020-2021 is relying on specific increases in average personal income tax rates.
"The tax hikes reflect a seismic shift in the taxation burden from business to individuals. The personal tax increases are necessary to compensate for the government's controversial $65.4 billion company tax cut."
In other words, the government is using under-the-radar methods such as income tax "bracket creep" to ramp up its offensive against working people, while handing over billions of dollars to the super-wealthy 1%.
Combined with the accelerating attacks on trade union rights and measures such as the slashing of penalty rates for weekend work, the ruling class assault on working people and the poor is intensifying.
The time has come for the labour movement to prepare a large-scale fight back to defend wages, rights and conditions – and to halt the ongoing shift in the tax burden onto the working class.
Green Left Weekly supports calls for a radical change in Australia's tax system that takes aim at big business and the super-wealthy. Far from cutting the company tax rate, we say it should be immediately returned from its current level of 30% to 49%, as it was in 1988.
The highest tax bracket should be raised from its current 47% to its previous level of 60% and the Goods and Services Tax (GST), which hits ordinary people the most, should be abolished.
GLW will continue to expose the tax rorts of big business and the rich, and call for equity in the tax system, substantial wage rises for workers and the restoration of full penalty rates.
However, we need your assistance to continue to get the message out.
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