Draft Tax policy

Draft Tax policy

Background and context

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Not content with preserving the current biased system, the Coalition federal government is seeking to increase the tax burden on the workers and the poor, while slashing the tax paid by the corporations and the rich. Having already rammed through cuts in the tax rate on small and medium companies from 30 per cent to 25 per cent, the government remains committed -- despite being temporarily blocked in the Senate -- to cutting tax for big corporations by the same amount.

Moreover, the government's so-called "income tax reform" package, adopted by Parliament in June 2018, is overall, a major escalation of the capitalist class war by the rich against the poor and working people.

This initial tranche of income tax measure reduces tax by a very modest amount for low-income taxpayers, but the long-term effect of the package is to massively reduce tax on the wealthy and attack the remaining elements of a progressive taxation system established in this country over many years.

In the end, from July 2019, the changes will totally flatten the tax system by removing the 37 per cent tax threshold altogether and increasing the threshold for 32.5 per cent cents in the dollar to $200,000. This means that people earning between $41,000 and $200,000 -- 94 per cent of the population -- will pay the same rate of tax.

Policy introduction

Australia's taxation system is a class-based network of taxes, levies and exemptions aimed at bolstering the wealth of the rich and the big corporations, and raising the bulk of government revenue from the working people and the poor. It is a key element of the capitalist class's utilisation of the state to maintain its wealth and its rule.

At the same time as tax rates for the wealthy and the big corporations are being reduced, high-come earners and big corporations are able to use loopholes in the system to artificially reduce their stated income and profits, and to dodge their real tax responsibilities.

The result is that many wealthy people and giant corporations end up paying very little or no tax. This must end. Laws and tax regulations, and the powers of the ATO (Australian Tax Office), must be strengthened to eliminate tax dodging by the corporations and the rich.

Finally, the GST (Goods and Services Tax) was introduced by the John Howard Coalition government in 2001 in the face of strong public opposition. It is an inherently regressive tax, which overwhelmingly affects consumption by ordinary people the most, and should be repealed.

Taxation is essential for the funding of public facilities, infrastructure and services, such as public health, education, transport and social welfare. A fair tax system would act as a redistributive mechanism to transfer wealth from the rich to the poor.

For a steeply progressive tax system

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Socialist Alliance stands for a major restructuring of the current unfair system to one based on equality and sustainablity. To this end, we support the following measures:

  • Socialist Alliance calls for a radical transformation of the tax system that takes aim at big business and the super-rich.
  • The move to raise the income threshold to $200,000 for the 32.5 cents in the dollar bracket should be reversed and current tax brackets should be subject to regular adjustments for inflation.
  • The highest tax bracket should be raised from its current 47% to its previous level of 60%. The GST, which hits ordinary people the hardest, should be abolished.
  • Far from cutting the corporate tax rate, the Socialist Alliance says it should be immediately returned from its current level of 30% to 49%, as it was until 1988, and serious measures must be taken to eliminate corporate tax-dodging.
  • Tax the big polluters; end the billions in public subsidies to mining corporations, banks and energy companies.
  • The Socialist Alliance stands for a steeply progressive taxation system, in which big companies and the super-rich are made to pay.