Scrap the GST, tax the rich

Federal independent MPs, Tony Windsor and Rob Oakeshott, have put pressure on the Julia Gillard's government to raise the Goods and Services Tax (GST) and to slash so called “middle class welfare” entitlements.

In a November 15 article in the The Australian Financial Review, Windsor said he supports raising the GST and widening the application of the tax. Apart from raising the tax from 10% to 11%, the government’s recent GST review recommended the tax also be applied to fresh food, health and educational services.

Windsor also argued that Australia needs to cut middle-class welfare “handouts”, including the baby bonus, to get the federal budget into surplus.

The GST was first introduced by the John Howard government in 2000. It is a regressive tax, which imposes more burden (relative to resources) on the poor than on the rich. Those on fixed incomes, unemployed or living on the age pension, and those who do not pay income tax, pat the same GST rate as a billionaire.

Socialist Alliance’s policy is to tax the rich by making the income tax rate truly progressive, with the highest brackets raised immediately from 47% to 60%. The company tax rate should immediately be returned back to 49%, where it was until 1988.

In addition, the Gillard government should scrap the watered-down mining superprofits tax it agreed to with the biggest mining companies and come up with a serious tax on the outrageous profits these companies are still making.

Most of the massive mining operations in Queensland and Western Australia operate on Crown land, which is supposedly owned by the people of Australia, although in actuality it was brutally stolen from Indigenous Australians.

So, not only are the mining companies getting a cheap deal from the government with access to this land, but the government is collecting very little tax for the privilege.

Using money collected from the billions of dollars in super-profits created by the mining boom, the government could have built a Melbourne to Sydney fast train service or maybe a massively expanded Sydney metro rail network. But such is the distortion of the Australian economy that the power of the mining and fossil fuel mafias reign supreme.

The Socialist Alliance says the mining sector should be placed in public hands under democratic control.

The fossil fuel sector should be completely phased out and replaced by new sustainable industries and the workers who have been displaced should be retrained and given a fresh start. This country’s current tax regime is an expression of the power relationship between workers and those who control big business.

To radically change that status quo will require the Australian working class to challenge, confront and break the power of big capital in this country.