In a sign that an election might not be too far away, Labor leader Anthony Albanese has announced that the opposition will support the federal government’s moves to lock in tax cuts for high income earners.
The move, which will mean that people earning $200,000 a year will pay the same rate of tax as someone earning $45,000, has been criticised as a ‘Budget booby trap’ by a leading advocacy group.
Mr Albanese made a raft of policy commitments, but the most controversial includes upholding the legislated changes to personal income taxes while maintaining the existing regimes for negative gearing and capital gains tax.
“Labor is providing certainty and clarity to Australian working families after a difficult two years for our country and the world,” Mr Albanese said.
“Our focus is on making sure Australia emerges from this crisis stronger and more resilient – with an economy that works for working families not the other way around.
“Improving the Budget is all about growing the economy, cracking down on waste and rorts, creating more opportunities for more Australians in more parts of the country, and creating a society that is stronger after COVID-19 than it was before.
“It also means ensuring our broader tax system is fair and sustainable.”
Read more: The top 10 super funds of 2020-21
Australian Council of Social Service (ACOSS) chief executive Dr Cassandra Goldie said Australia was already a very low taxing country and that the latest tax breaks would mean cuts for many of those who could least afford it.
“If they go ahead, the $17 billion in annual tax cuts will booby trap future budgets, making it almost inevitable that essential services and social security payments will be cut,” Dr Goldie said.
“It’s unbelievable that in the middle of a third round of lockdowns, with over a million people on social security payments excluded from disaster payments, we’ve paused to discuss whether people on $200k-plus should get a tax cut of $180 a week.
“We’ve been here before – years of unaffordable tax cuts set us up for the savage cuts to social security, health and other essential services in the 2014 Budget.”
Analysis by leading think tank The Australia Institute also shows that the majority of the stage three tax cuts will go to high income earners.
According to The Australia Institute’s senior economist Matt Grudnoff, more than 50 per cent of the money from the tax breaks will go to the top 10 per cent of taxpayers and more than 70 per cent will go to the top 20 per cent of taxpayers.
The bottom 20 per cent of taxpayers get no benefit from the tax cuts.
Dr Goldie was also scathing of Labor’s announcement that it would continue with the current rules boosting negative gearing and offering capital gains tax breaks.
“It’s deeply disappointing that both major parties now back regressive tax breaks for housing that promote speculation in the asset we all need – a place to live,” Dr Goldie said.
“The longer negative gearing and capital gains tax breaks continue, the faster house prices and rents will rise.”
As part of Labor’s swathe of policy announcements this week, it also announced that it would introduce a bill requiring ministers to explain when they reject recommendations from their department, in a bid to stamp out rorting.
The proposal is designed to stop ministers from granting money into areas they deem necessary against those recommended after an independent assessment, as has happened with the sports rorts and car park rorts controversies.
Mr Albanese said the bill would “force ministers who approve grants rejected by their departments, or award grants in their own electorates, to report the decision to the finance minister within 30 days”.
These reports would then need to be tabled in parliament five days after the finance minister received them.
Are you worried that there could be cuts to social service payments as a result of these tax cuts for high income earners? Are you surprised that Labor has decided to wave these tax cuts through? Why not share your thoughts in the comments section below?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.