Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Debate on tax and 'small government' flares again

By Tristan Ewins - posted Thursday, 29 January 2015


But if all this is true what are the alternatives?

Firstly Labor should support a progressive restructuring of the tax system as a whole. That must mean winding back superannuation concessions for the well-off  - a good proportion out of about $50 billion in total by 2016-17. In total superannuation concessions cost about as much the entire aged pension budget. It could also mean partially withdrawing dividend imputation (tax breaks ostensibly to negate 'double taxation') - justified on distributive grounds – and with exemptions for 'small investors'.

Further – it could entail an active restructuring of income tax – as opposed to 'passively' waiting for bracket creep to 'do its work'. 'Passive' reliance on bracket creep for lower and middle income tax thresholds would have a regressive distributive effect. (perhaps hence Hockey's support) But restructuring and altering income tax scales and rates could allow bracket creep to work for higher income earners, delivering billions while actually reducing income tax for those on low incomes. A new top income tax rate could also be established for the millionaires. And restoration of a robust 'resource rent' tax for mining could deliver billions; as could 'super profits' taxes in crucial areas such as banking. Finally: with modest increases in corporate tax we could signal our desire to end the 'race to the bottom' that results in effective 'corporate welfare'.

Advertisement

If an incoming Labor Government succeeded in raising at least $45 billion in new Commonwealth revenue (in today's terms) through these and other measures in its first term upon retaking government it would be in a strong position to deliver on Australian taxpayers needs in education, health, transport, communications, welfare and more. Specifically it could fund big initiatives such as the National Disability Insurance Scheme progressively. And it could also provide for another area of critical need – for a National Aged Care Insurance Scheme. Without austerity.

In response the Conservatives and economic libertarians would insist that public provision 'rejects the market' which is the proper arbiter of all goods and services.

But Labor must reject such claims for several very practical reasons; as well as for the sake of economic justice.

Firstly 'collective consumption' as taxpayers can often secure for us 'a better deal' than in our capacities as isolated private consumers. Private infrastructure means user pays – which hits low and middle income citizens hardest. It also involves higher rates of borrowing – with the cost structures passed on to consumers. Finally it involves private profit margins and dividends – which demand that as much income be extracted from consumers as is possible. And in the case of private toll roads, for instance, can mean the exclusion of public transport investment to artificially support the particular private investors.

Competition in place of 'strategic and natural public monopoly' also passes on increased underlying cost-structures to consumers. A 'hybrid' economic system which delivered those efficient cost structures on would mean more consumption power – not less. Business actually gains from this. Both through cheaper infrastructure and services – but also through the increased consumption power of workers and citizens.

Hence there is 'the bottom line' that tax-payers would have more to spend in the areas where choice is most important as a consequence of the savings from strategic 'collective consumption'; including of'social insurance' for instance. 'Market forces' do not necessarily make enough of a difference when it comes to roads and rail; or in the provision of water and energy; or in areas that are properly the reserve of 'natural public monopoly'. (eg: energy, water, communications, and transport infrastructure) Often it all comes down to a contest as to which provider can most efficiently fleece consumers with unintelligible deals and plans foisted upon people who would much rather take 'the basics' for granted. And in areas like Education – 'market choice' just sorts us out on the basis of our capacity to pay. That is, on the basis of class. And that is unfair.

Advertisement

But if ordinary people secure a 'better deal' through collective consumption (as taxpayers) in these areas that frees up more money for determining our needs structures in the areas where diversity of choice really counts. For instance, including but not limited to consumption and other participation in culture, sport, fitness, social activity and art.

The time has come to question neo-liberal shibboleths around 'small government' and 'the market'. An alternative is possible which delivers a better deal for the general public in our capacities as workers, citizens and consumers. But which has also learned from the mistakes of the old socialism which thought it could supersede 'the market' entirely.

  1. Pages:
  2. 1
  3. Page 2
  4. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

22 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
.

Other articles by this Author

All articles by Tristan Ewins

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Tristan Ewins
Article Tools
Comment 22 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy