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 hilt. 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 businesses. 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 corporations. 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 government.