Finance minister Mathias Cormann has threatened the opposition parties that if they continue to block key budget measures — such as the demolition of universal health care and welfare, the deregulation of university fees, and the hike in the interest rate on student HECS debts — then the government would be forced to look at raising taxes.
On the surface it is a ridiculous threat. If the opposition parties have the numbers to block these nasty measures in the Senate then they also have the numbers to block any tax rises. However, the political logic of making this threat is to reinforce the neoliberal posture that lower taxes are innately a good thing.
But Cormann's tax threat was “brave” because today only a small number of people buy this lie.
According to polling released recently by the Australia Institute, only 9% of people in Australia agreed with the proposal that the government should “collect less tax from everyone and provide fewer social services”, which is the Tony Abbott government's position.
Only 1% wanted the government to “collect less tax from big business and higher income earners and provide fewer social services”, which is what the Abbott budget actually seeks to do.
The poll also found that 55% want the government to “provide more social services by collecting more tax, especially from big business and higher income earners”. A further 5% want the government to “provide more social services by collecting more tax from everyone” and 20% want to leave social services as they are.
Another survey, released by Oxfam Australia in June, showed that 70% think it is unfair that the richest 1% of Australians owns more than the poorest 60% and 76% do not think the very wealthy pay enough tax.
The Oxfam Australia survey also found that the nine richest people in Australia own more than the poorest 4.54 million combined and the richest 1% own more than 60% of the population.
Since the 1980s, Labor and Liberal governments have been making the rich richer. The richest 1% in Australia has nearly doubled its share of all income — and that is without taking into account the income they've spirited away in tax havens and “minimised” through creative accounting.
Oxfam has estimated that, globally, the rich have about US$18.5 trillion unrecorded and hidden in tax havens.
Despite having the fourth-lowest tax rate in the OECD (developed countries), Australian governments have slashed taxes on the richest. The Australia Institute estimated that the cumulative cost of the tax cuts introduced since 2005 is about $170 billion. The top 10% of income earners have received more of that than the bottom 80% combined.
The Socialist Alliance has argued that a government of the people, by the people and for the people should sharply increase taxes on big corporations and the rich. This is not just to stop the cuts, but to raise the funds to make the large investments in social infrastructure to address the climate change emergency and address other urgent social needs and justice.
We need a total reversal of the socially destructive drive since the 1980s to lower the taxes on the rich while raising indirect taxes, such as the GST and fuel excise, which disproportionately hit the poorest people.
The GST should be abolished and the income tax rate truly progressive, with the highest brackets raised immediately from 47% to 60%. The company tax rate, now just 30%, should immediately be returned back to 49%, where it was until 1988.
In addition, Australia should implement a serious mining tax without the thousands of loopholes of the proposed former Rudd Labor government mining tax and the watered down Gillard Labor government farce of a mining tax.
The mining companies, which in 2012 made 21% of all profits in Australia, are publicly subsidised by an estimated $4.5 billion a year and pay the lowest rate of tax on profits of any industry.
The mining super profit tax proposed by former PM Kevin Rudd was a mere 40% and we all saw how the mining companies reacted. However, in Norway, a 78% tax on revenue from petroleum and gas extracts up to 90% of gross profits in that sector. At the very least, a pro-people government should match that.
The rich would threaten capital flight, but they cannot put the factories, farms and mines — and all the workers who do all the “lifting” and create value — into their suitcases.