No need for cuts if Labor would tax the rich

Labor tells us that there have to be cuts elsewhere to fund any new social spending programs. Universities have felt the axe to pay for the Gonski schools spending. Yet there are billions of dollars that could be raised through targeting corporate profits and taxing the rich.

The big banks ANZ, Westpac and the Commonwealth made a combined total of over $10 billion profit in the last six months alone. All three posted profit increases, with ANZ and Westpac boosting their takings by a whopping 10 per cent each.

In 2009-10 the mining companies made total profits of $51 billion according to the Bureau of Statistics, up from just $13 billion a decade earlier, and the figures have been climbing since.
BHP’s last six-month profit alone came in at $5.7 billion. In the same period Labor’s useless mining tax took back just $77 million of BHP’s profits.

Julia Gillard’s cave in to the mining companies that watered down the tax means it is now expected to raise a paltry $200 million in its first year, and just $3.3 billion over its first four years.

The Greens have called for the tax to be restored to its initial rate of 40 per cent and applied to all minerals that produce super profits. The Parliamentary Budget Office estimates this would raise $26.2 billion over three years. This is almost eight times what Labor’s tax will raise.

That amount of money alone could fully fund the introduction of DisabilityCare at an extra $7 billion a year as well as pay for raising Newstart $50 a week at $1.8 billion a year.

And there are plenty of other government handouts to corporations. Holden has received $2.17 billion in government subsidies over the past 12 years, yet slashed 500 jobs in April and is now rumoured to be set to close completely, threatening another 3500 jobs.

But it’s not just the banks and the mining giants dodging tax. Since the mid-1980s corporate tax rates have been slashed from 46 to 30 per cent across the board. Restoring the rate could raise up to $50 billion a year.

That amount could more than pay for the Gonski schools spending at an extra $6.5 billion a year.
The amount still left over could provide enough funds needed to allow a ten-year program to completely transition to renewable energy, based on solar thermal and wind power, and still leave billions for other projects.

Tax cuts for the rich

But the government could also immediately reverse the tax cuts the Howard government promised to high-income earners at the 2007 election. Labor was unwilling to stand up to the rich and so agreed to match them and has avoided the issue ever since.

Calculations by the Australia Institute show that reversing just this one round of tax cuts to the top 10 per cent of income earners would raise an extra $16 billion a year.

Plenty of millionaires seem to get away with paying nothing. According to the Tax Office, 70 Australians with incomes over $1 million in 2010-11 paid no tax, despite earning a total of $194 million between them.
Clearly the loopholes in the tax system for the rich are big enough to drive a truck through.

The top rate of income tax, which applies to those who earn over $180,000 a year or the top 2 or 3 per cent of earners, sat at 60 per cent in Australia before 1985 but is now at only 45 per cent.

Instead we have seen an increase in regressive taxes that hit workers and the poor, like the GST.

Finally there is the obscene level of wasted spending on the military. The Australian government insists on seeing itself as a player on the world stage, able to send troops alongside the US into wars like

Afghanistan and Iraq and to police the local region.
Currently this costs $25.4 billion each year, more than the federal government spends on universities or schools.

The money to fund spending on schools, disabilities, renewable energy and services is there. But finding it requires confronting corporations and the rich to take back some of the wealth they have stolen from the rest of us.

This is a task that the Labor government has failed at every opportunity, despite the fact that it would be massively popular.

They have consistently chosen the side of the rich, choosing to cut payments to single parents instead of targeting the wealthy, backing down over the mining tax and avoiding a fight over superannuation deductions for the wealthy. This is not a government on the side of workers and the poor.

By James Supple

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