The Guardian December 1, 1999

More tax cuts for the rich

As public hospitals turn away patients and teachers continue their 
strike action, Federal Labor has given the Coalition Government the go-
ahead for its business tax cuts that will ultimately place even more 
pressure on the public health and education systems.

Stunned Democrats were left out in the cold as Labor gazzumped them. The 
Coalition Government's second pro-business tax package is set to have a 
smooth passage through the Senate.

The first package brought the GST and large cuts in personal income tax for 
the rich. The package just agreed to centres around cuts to the capital 
gains tax (CGT) and corporate income tax.

The corporate tax rate will be reduced from 36 cents in the dollar to 34 
cents in the dollar in 2000-2001, and then 30 cents in 2001-2002. Many 
corporations are able to minimise even these rates and some avoid paying 
any tax at all.

The CGT paid by individuals will be halved  from 48.5 per cent [highest 
personal income tax rate] to 24.25 per cent for the majority.

Accountants are set to make a mint as businesses and the wealthy seek their 
advice on restructuring their affairs to exploit the new tax regime to the 

With the help of a good accountant, the new measures could see small 
businesses paying no capital gains tax when they buy and sell assets or 

There are proposals for tax avoidance measures. These would give the 
Taxation Commissioner powers to deal with people attempting to convert 
income into capital so that it is taxed at the lower CGT rate (24.5% 
instead of 30% or 46%).

Tax dodges

There is nothing to curb other tax dodges, so that the likes of Packer's 
company would be forced to pay tax on its $1 billion plus profits.

These latest "reforms" are the first steps towards abolishing income and 
capital gains tax on multinational corporations investing in venture 
capital (new high risk projects).

The tax changes are being driven by big business. Business leader John 
Ralph chaired the committee that negotiated the changes with big business.

The largest corporations rallied under the Business Coalition for Tax 
Reform to co-ordinate their efforts and run a multi-million dollar media 
campaign in support of the Goods and Services Tax because it will be mainly 
paid by low income earners.

They have a far-reaching agenda which is being phased in, bit by bit by the 
Coalition Government.

The GST and the reduction in personal income tax for high income earners, 
are part of this agenda.

Once these changes are set in concrete, more tax cuts will follow for 
business and the rich. Just as Reith is phasing in his anti-union 
legislation bit by bit, Treasurer Peter Costello is also taking a step by 
step approach to completely revamping the tax system. 

The longer-term aim is to remove all taxes on income and to rely on the GST 
 a tax on consumption paid by the people  for government revenue.

Good for business

At the same time, privatisation, user-pays and the winding back of the 
public sector will also reduce government spending on essential public 
services. The aim is to make Australia an attractive place for foreign 
investors as well as Australian-based corporations to do business and reap 
maximum profits. Australia would become another tax-free haven for the big 

OECD and other industrialised countries are all moving in the same 
direction with their tax "reforms" as they respond to the demands of 
transnational corporations.

Yet again the people of Australia are victims of the two-party system.

Labor leaders chose to shut the Democrats out, to shore up the authority of 
the major parties and to signal to big business that they have nothing to 
fear from a Labor Government.

Once people feel the full force of price rises coming from a GST and 
contrast this with the business tax cuts being handed out to big business 
there will be a strong backlash as there has been in other countries which 
have imposed a GST.

In addition the cutbacks in public health and education and the 
privatisation of publicly owned enterprises will add further to the 
disillusion with the major parties and emphasise the urgency of building a 
left and progressive alternative to replace the major parties in 

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