Magazine of Socialist Action in Australia

Tax the richest 1% to fund jobs, homes and services

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Last month saw the Labor Government organise a two-day tax forum. The forum was attended by big business leaders, welfare agencies and trade union officials. Many labelled it a talkfest given that the mining tax, the carbon tax and the GST were not on the agenda to be discussed.

It is true that nothing concrete was agreed but perhaps the most interesting aspects of the forum were the ideas put forward by those who represent the Australia’s rich and powerful.

The Australian Industry Group (a union for employers) called for the corporate tax rate to be cut from 30% to 25%. At the same time demands were made for further cuts to welfare and social spending. This is an indication of the direction big business wants to take society as the economic crisis gets worse.

Australia already has some of the lowest tax rates in the developed world. Beyond this, big business enjoys further tax breaks. Overall, the Australia Institute estimates that the mining industry enjoys up to $10 billion in tax breaks and subsidies annually. This is a sector that only pays $13.3 billion in company tax. This means the government is essentially waiving 43% of the mining sector’s corporate tax bill!

Treasurer Wayne Swan did announce that he wanted to lift the tax-free income threshold to $21,000 but no firm dates for implementation were given. It is unlikely that this would happen without the government simultaneously lowering the amount of tax that businesses pay

Cutting company tax rates shifts the burden of funding things like education, healthcare, welfare and social services onto wage earners. This is despite the fact that workers, unlike employers, do not make profit.

The Socialist Party believes that company tax along with taxes on the wealthiest 1% must increase significantly. Despite all the false claims about the ‘trickle down effect’ research has shown that the rich prefer to save their windfalls. Hoarded cash creates no jobs and funds no new schools or hospitals.

A recent study pointed out that if Australia had collected the same proportion of GDP as tax revenue as the UK does, “an extra $108.1 billion would have been available for public spending. This is more than the entire amount that the Australian federal government spends on health and education put together”.

Rather than increasing the tax burden on working-class and middle-class people the super-rich should be much more heavily taxed. This can be done in the form of increased direct taxes, by progressive taxation and via a wealth tax. A massive amount of wealth exists in society. The problem is that under capitalism it is extremely unequally distributed.

Socialists would go further than just taxing the rich and argue that these measures alone are not enough on their own to lift people out of poverty and provide long-term increased funding for public services. To achieve that a socialist plan of economic production would be needed. This would take big business out of private hands and into public ownership through democratic working-class control and management.

The massive wealth that big business accumulates could then fund a greatly increased minimum wage, reduce the taxes paid by working-class and middle-class people and an expansion of public services like health and education. It could also fund a massive program of public investment to create jobs, housing and decent living conditions for the majority of people in Australia.

By Socialist Party reporters