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Albanese: take a stand on tax

By Tristan Ewins - posted Friday, 21 June 2019


Dear Anthony Albanese,

Don't pass phases 2 and 3 of the Tory Tax Plan.

Abbott blocked good policy ; It wasn't without reason that he earned the nickname "Dr No". Now Labor has a right to block sweeping tax cuts that will indirectly hurt millions of its constituents. And many will be very disillusioned or angry if you let phases 2 and 3 pass.

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The Government's plans include the following for phases two and three: (from Treasury)

For 2022–23 and 2023–24, the top threshold of the 19% tax bracket will increase from $37,000 to $41,000 the 32.5% bracket will increase from $90,000 to $120,000.
For 2024–25 income year onwards, the top threshold of the 32.5% tax bracket will increase from $120,000 to $200,000.

This represents an effective 'flattening' of the tax scales ; with higher income individuals on effectively lower rates of tax. The Government argues there is no diminution of progressivity. But for instance, raising the top threshold by $80,000 means while there will be less tax taken overall, those on lower and middle incomes will be paying a higher proportion of the total tax take.

It will also cost the Budget $160 billion over 10 years.This when we're likely heading for a recession. It will fuel austerity. Especially if the government prioritises the surplus even in time of economic downturn. And indeed, Treasurer, Josh Frydenberg has been quite clear that the surplus with be prioritised over stimulus even if the economy weakens further.

Finally: remember that the median wage in Australia is only approximately $53,000/year.The Conservatives talk about people on $120,000/year as if they're 'battlers'.

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It's true that a small number of workers earn this kind of money. ($120,000/year and up) But compared with the vast majority of other workers this is often 'the aristocracy of labour' (a term used to describe a minority of high wage workers who become distanced from their class interests and the majority other workers on account of their high incomes ; though some high wage workers – including those supported by strong unions – retain a broader sense of class interest)

We cannot let the majority's sense of class interest become 'blurred' and 'diluted' by the example of this 'labour aristocracy' which most workers will never be able to aspire to.

And if we don't stand up and fight only the Conservatives will win with their long term agenda of a flat income tax.

They also want to legislate ahead for the next term of government which is totally unreasonable.

The Conservatives claim a mandate. Yet they won through a fear campaign based on lies ; lies of a 'death tax' ; and of 'great big new taxes' on retirees. Also there was Clive Palmer's Money (into the tens of millions); and preferences from Palmer and One Nation.

And in Opposition under Abbott the Conservatives never respected Labor's mandate.

Labor needs to restructure income tax for fairness ; and index the rates for the lower brackets to avoid a vicious cycle of bracket creep and regressive tax cuts which flatten the scales. This must be a priority for Labor upon re-election.

We don't need to capitulate on progressive policy. Labor needs a strategy to nullify the fear and disinformation campaigns. Capitulation is not a strategy.

Raise progressive taxes by somewhere in the vicinity of 1% to 1.5% of GDP upon retaking government. Exclude lower and middle income earners from higher taxes. Be thorough in this. Point out the moderate scale of the reform ; and explain where the money is going. (eg: Aged Care Social Insurance, Medicare Dental) If Labor must tax a broader base then consider the Medicare Levy. It's the closest thing in this country to "a popular tax" because of the clear connection with medical services, and the universal coverage most Australians value. One option is to enhance the progressivity of the Medicare Levy by adding a new scale for higher income earners.

As noted; the Coalition is fond of arguing about "great big new taxes". Labor HAS to fight them on this. Again: Insist on a figure in the vicinity of 1% to 1.5% of GDP in the first term of a new Labor Government. Point to our tax rates in Australia compared with the OECD. (approx. 27% of GDP compared with approx. 34% of GDP) Australian tax overall is approximately seven percentage points lower in Australia compared with the OECD average. That's a difference of approximately $119 billion Australian dollars a year.

If we give in we get an Americanisation of the discourse which gradually flattens tax scales, and makes meaningful social democratic reform on social wage, social insurance, public infrastructure and welfare impossible.

Around April next year the Aged Care Royal Commission is also expected to come down with its findings. And to correct the flaws in the system – which are causing untold suffering to our vulnerable elderly (friends, family, mothers, fathers, grandparents) – this will require new investments into many billions annually.

If the Coalition argue Labor is denying average workers a tax cut Labor must insist again and again it is willing to pass the first round if only the Government split the bills. The public must be left in no doubt.

Take a stand, Albo. That's what ordinary Labor members and voters want and expect from you.

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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.
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