Magazine of the Socialist Party, Australian section of the CWI

Tax the rich to fund jobs & public services

Outgoing Treasury Secretary Martin Parkinson made a speech in April suggesting the best course of action to address budget shortcomings was to lift the Goods and Services Tax (GST) to 15%.

By Chris Dite, Socialist Party

Liberal and Labor politicians scrambled to display their opposition to such a move. Senior government figures like Julie Bishop denied any such plans were afoot while Labor politicians gave stock standard answers about how any such moves would hit low income earners disproportionately and did not have their support.

The reality however is that both parties are committed to taxing ordinary workers more – directly through income tax or indirectly through a consumption tax like the GST – before they’ll even consider increasing taxes on big business.

The shocking truth of Australia’s taxation system is that low and middle income earners are already taxed disproportionately. In the 2011-2012 financial year GST and income tax combined made up 52% of all taxes collected. Corporate tax made up only 19%. Both major parties are complicit in facilitating this process which leads to rising inequality.

Rather than increasing corporate taxes on sectors like mining and banking, which in the past few years have posted record profits, both parties prefer to sell off public infrastructure, make brutal budget cuts and rely on personal income tax rises to fund any budget shortfalls.

Big business is well-organised and responds quickly and viciously to any attempt by the government to raise the corporate tax rate or even specifically raise taxes in super profitable sectors. The best recent example is the response to Kevin Rudd’s modest mining tax, which was designed to redistribute profits from the mining sector to less profitable industries.

Mining bosses orchestrated a coup and forced the ALP to replace Rudd with Julia Gillard, who watered down the tax making it totally ineffectual. This despite record multi-billion dollar profits across the industry and about $4 billion in subsidies paid to mining companies each year!

Unfortunately ordinary people have not been as organised as big business in recent decades. The ALP mimic the Liberals at every turn and trade unions have failed to put up a real fight to stop the huge shift in wealth that has taken place. At present big business are getting their way.

Socialists demand that we increase taxes on big business and the super-rich. Even modest increases would mean that we could pay off the budget deficit tomorrow. Unfortunately, the commitment that the ALP and the trade union leaders have to the market system and ‘social partnership’ means that they are unlikely to support these measures any time soon.

That is why we need to build a new political party that stands unashamedly for the interests of ordinary people. A party that wants to put an end to rising income inequality.

Much could be done by restructuring the tax regime in favour of ordinary people but even more could be achieved if we were to bring the major companies that dominate the economy into public hands and under community control. We could then harness their wealth-producing power to meet peoples’ needs and end this economic madness where our jobs and services have to be sacrificed to line the pockets of a tiny few.