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Issue #1876      July 10, 2019

Tax the rich

“The $158 billion in tax cuts over the next ten years could have created thousands of well-paid jobs, building the economy and providing much needed public infrastructure around the country,” Communist Party of Australia (CPA) national president Vinnie Molina told the Guardian (see Build the alternative).

The money could have been used to increase social security payments; build, equip and staff public hospitals; give a long overdue boost to public education; and to house the rising number of homeless.

Last week, the Coalition got its legislation for $158 billion in tax cuts through both Houses of Parliament, with little difficulty. After unsuccessfully putting forward a few amendments, Labor then backed down, as many had expected. The two Centre Alliance and Jacqui Lambie cross-benchers also supported the three tranches of tax cuts doing deals with the government.

These tax cuts come on top of another $152 billion that were passed by Parliament last year. That is a total of $300 billion over 10 years! And the government would have us believe we cannot afford to meet the needs of the NDIS, public hospitals, schools, transport, housing, etc.

More than half the cost of the package over 10 years goes to individuals earning $90,000 or more – the top 20 percent of taxpayers. Overall, $77 billion or 26 percent of the $300 billion cost of the package over 10 years goes to individuals earning $180,000 or more – the top five percent. (The Australia Institute)

“We don’t know what the economy or the budget will look like in three or five years’ time. It was reckless to lock in $36 billion a year in tax cuts – almost as much as the government spends on education – five years in advance,” Australian Council of Social Service acting CEO Jacqueline Phillips said.

“The claim that the budget will still be in surplus despite these tax cuts is based on two flawed assumptions: that economic growth will bounce back to three percent a year and that growth in government expenditure can be held at the lowest levels in 50 years.”

In keeping with the government’s big business ideology, these are tax cuts for the rich. When the inevitable economic downturn comes, the government will cry poor and fund the tax cuts out of social services and the public service. In other words it will rob those who got little or nothing out of the cuts.

Nothing for the poor

No one seems to be commenting on the millions of people who do not stand to gain a cent. Close to one third of households will receive not one cent of that $300 billion.

These include the workers on very low wages, the underemployed who are seeking more hours of work and the unemployed. Their income is below the taxable threshold which will rise to $21,885.

Social security recipients attempt to survive on below poverty incomes and are increasingly forced to turn to family or charities for basics. This situation will only worsen.

The Australian Greens are pushing for the Newstart and Youth Allowances to be increased by $75. At present the unemployed are expected to survive on $40 a day – an amount that even the politicians that refuse to increase it admit they could not do. For a young unemployed person living away from home, the amount is even lower, at only $32.50 a day.

Many employers and the Reserve Bank of Australia support an increase in these payments. Unfortunately, both Labor and the Coalition have taken a callous position and oppose any increase. Pressure needs to be maintained on them. It would hardly make a dent in the budget, costing an estimated $2-3 billion per annum.

They would spend every extra dollar, and so increase demand in a lagging economy.

Economy unstable

In fact, the economy shows all the signs of a looming crisis. The stock market has hit record highs, inflated by people deserting the low interest rates being offered on saving deposits in banks.

The Reserve Bank (RBA) has cuts interest rates two months in a row, which has all the appearances of a desperate act, by a desperate central bank. The RBA has been begging the government to take urgent action to stimulate the economy. It has almost run out of things it can do.

The official unemployment rate is 5.1 percent and underemployment is 8.4 percent. That is, a total of 13.5 percent of workers are either unable to find a job or a job offering enough hours of work. In raw figures, the number of unemployed is 689,000 and the number of under-employed is 1.149 million. (ABS 6202.0, May 2019)

What that means is a staggering 1.838 million people are completely or partially shut out of the labour force!

The Australian Bureau of Statistics’ definition of employed includes anyone who had one hour or more of paid work in the previous couple of weeks.

Giving large hand-outs to the rich makes no sense in social or economic terms when there are so many unmet needs and such a high level of unemployment and underemployment.

Precarious employment

The growing casualisation of work creates considerable insecurity for workers, who never know from day to day whether they will be working and if so, for how many hours. For those with family responsibilities, mostly women, this makes life extremely difficult.

There is no justification for work that is ongoing, such as that of public servants, TAFE and tertiary teachers or nurses being casualised. And while there is a loading for the hourly rate paid, it hardly compensates for the lack of annual leave, sick leave, and other benefits that have been won by trade unions over decades of struggle.

In industry, casualisation is used to cut labour costs and hence increase profits. It pits worker against worker in a climate of fear, the fear that they won’t be asked back if they rock the boat, bring in their union, etc. It is used to drive down conditions and wages.

The legislation passed last Thursday entrenches large tax cuts of $11,640 for people with taxable incomes over $200,000 and peanuts or nothing for those on low or middle incomes (below $40,000).

Minimum wage

The national minimum wage rose by three percent on July to $780.40 following the Fair Work Commission’s annual review. Workers on this low wage are set to receive a tax cut of $524 – $10 more per week in their pockets. Then in 2022-23 it rises to $638.

But for many of these low-paid worker the benefits will be cancelled by the penalty rate cuts that hit on July 1.

The economy is on a knife edge with the Reserve Bank almost begging the government to take action to increase demand for goods and services. People are not spending because they do not have the money, do not have job security.

Workers need a decent wage rise. They need secure jobs and safe working conditions. This is the way forward to improve the lives of working people and their families. At the same time it will strengthen the economy.

“We the people, must work together and build an alternative for the people. A new type of government that ensures multinational corporations pay their share of tax and puts national resources in public hands to build a future sovereign fund would be a good start. A new type of government that would abolish the Goods and Services Tax, GST. This type of government would start to govern for the people of Australia,” Molina told the Guardian.

Next article – Editorial – Against the US blockade on Cubahere

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