With its changes to the stage three tax cuts set to sail through Parliament, the Albanese government appears to have achieved the impossible: successfully polishing a turd.
Yes, Labor’s modified version is definitely better. It will distribute the benefits of the tax cuts more evenly to people on lower incomes, and by maintaining the 37% bracket it prevents the flattening of our progressive tax system. Sure, it’s a good thing that the government (finally) pulled its finger out and took a better position on this neoliberal bonfire, and congrats to them for weathering the inevitable, apoplectic attacks from their political enemies and the corporate media ghouls (“broken promise!”, “socialism!”, etc) and emerging unscathed.
Indeed, polling suggests that Labor’s changes are quite popular with the electorate — which pours serious doubt on the notion that to win in 2022, Labor had no other choice but to support the Coalition’s policy in full. Turns out voters can be very receptive to good, progressive policies, provided you believe in and fight for them. Who knew?
But the problem remains: a turd rolled in glitter might be prettier than your average turd, but it is still very much a turd. Slashing taxes for the wealthy in an already-unequal Australia was a terrible idea when it was being cooked up by Malcolm Turnbull and Scott Morrison; it was a terrible idea when it was enshrined in law (with bipartisan support from the ALP); it was a terrible idea when it was being repeatedly defended by the Albanese “No One Left Behind™” Labor government for more than 18 months; and it remains a terrible idea today.
With its modifications, Labor has merely stepped over the criminally low bar of expectations set by the stage three package, and the party is now trying to laud itself as some great champion of the common man.
I don’t think we should let them get away with it.
First, while Labor’s stage three changes may be fair-er than the previous iteration, it’s still egregiously inequitable policy. The bottom 40% of income earners were set to receive less than 1% of the benefit of the Coalition’s tax cuts; under the government’s version, they’ll be getting just 9%. The people in the highest tax bracket have now had their potential tax cuts halved, but they’ll still be receiving an extra $4,500 per year.
In a country where the richest 1% holds 50 times the wealth of the bottom 60%, and where one in eight people — including one in every six kids — are living in poverty, the party of the worker is still committed to handing out $84 billion over the next decade to the top 5% of earners.
This, apparently, is the best and fairest possible way to tackle the cost of living crisis.
Second — and this critique has been almost entirely absent from the debate — there’s still the matter of what these gargantuan cuts will actually mean for the country. Labor’s plan will still see the Australian government wave goodbye to more than $300 billion in foregone revenue.
If you share the view of plenty of (rich) conservatives — that the government only collects tax so that it can dump it into a massive fire pit and set it ablaze and laugh and dance in the shadow of the flames — then this is tremendous news. But if you live in the real world, where universal public institutions funded by progressive taxation are fundamental to a decent, functioning society, you’ll know that this is very very bad, because it’s going to mean future cuts for our already-underfunded public services and the welfare state.
Unless, of course, Albanese and Chalmers are secretly planning to bust out some brave and radical new tax reforms to raise hundreds of billions of dollars over the next decade. Hold your breath!
At a time when you’d hope a self-proclaimed “progressive” Labor government would be using tax revenue to materially improve the lives of ordinary people — by building more public housing, fully funding and expanding our public healthcare and education systems, investing in the green transition, or maybe even just following its own expert panel’s advice to lift those on JobSeeker out of poverty — the Albanese government has instead resigned itself to a tax giveaway bonanza that will further widen the gap between the rich and the poor, and seed a brutal austerity program for us to all enjoy in the near future.
We deserve better than this. The tax-phobic bullshit we’re constantly fed by the media and political classes, and which has been used to justify the horrors of stage three, must be roundly rejected. In truth, Australia needs to collect more tax, not less.
Contrary to what you might hear from the geniuses at the Australian Financial Review, Australia is a low-tax country: accounting for state and federal taxes, our total tax-to-GDP ratio was at 29.5% in 2021, which makes us one of the lowest-taxed nations in the OECD. Switzerland, Iceland, Norway and Denmark have higher levels of tax than we do, which should mean that their economies are weak and miserable — yet somehow all those countries enjoy a higher GDP per capita than Australia, as well as better public services, a stronger welfare state, less inequality and more happiness.
So, comrades: let’s make it tax time. Let’s fight for wealth taxes, inheritance taxes and the Buffett rule (that is, a deductions cap that ensures high-income earners pay a minimum amount of tax — a popular policy that Albanese used to believe in).
The fact that well-paid FIFO workers and Gina Rinehart are in the same tax bracket is insane, so whack a few more tax brackets in there, and while you’re at it let’s get back to the mid-twentieth century, when the top marginal tax rates in Australia was above 60%. We should scrap stamp duty (a tax on buying a house? Come on!) and impose property and land taxes instead. We should tax massive financial transactions and banks. We should end the use of super accounts as tax shelters and we should collect windfall taxes when energy companies make bajillions simply because Russia invades Ukraine. We should make the fossil fuel companies actually pay their taxes, and then we should tax them some more, just for fun.
The democratic redistribution of wealth and resources is fundamental to winning a better and fairer country. We simply cannot give up on that idea — otherwise, there’ll be nothing but countless more turds to come.
