Tax: Rudd Labor squibs another challenge
The State is a parasite on the wealth workers create. So too are the bosses, the banks and the big landlords.
They fight against workers and among themselves over the value workers create in a multitude of ways – over interest rates, taxation, investment, wages, employment…
In terms of tax the State balances a need for expenditure to defend the system and provide a pittance in benefits to workers against the need to protect and encourage the crisis ridden accumulation process.
It was a Minister in a feudal government in France who summed up the dilemma the State under capitalism faces. As Jean Baptiste Colbert said: “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.”
In capitalist terms this usually means taxing labour at the expense of or more heavily than capital, sometimes in form but always in substance. The Henry Review does nothing to challenge this fundamental idea.
Indeed the fact that 40 percent of big business pays no income tax and most pay much less than the 30 percent headline rate will continue under Rudd Labor and its ‘tax reforms’.
The Henry Tax Review does put forward a long term tax plan for Australian capitalism as a whole.
The Rudd Labor Government in this election year has adopted just a few of the 138 Henry recommendations. The two main ones are to tax the miners under a resource rent tax of 40% on miners’ ‘super’ profits and increase the superannuation guarantee from nine percent to 12 percent by 2020. Yes, 2020!
On top of that Rudd Labor will cut company tax in three years time and over two years to 28 percent from 30 percent (Henry recommended 25 percent). For small business the cut to 28 percent will be from 2012.
The Government will also give small business an immediate write off for capital expenditure less than $5000 and accelerated depreciation of 30 percent on other pooled assets.
They will also pay up to $500 a year into superannuation for low income earners (those on less than $37,000 a year).
The Government will spend up to $780 million of the resource rent tax on infrastructure – roads, rail lines and ports.
In other words this is a pea and thimble trick moving money from the miners to small business and some low income earner superannuation contributions. But like all Rudd changes the benefits don’t come into effect immediately – only in the run up to the 2013 election.
And stay tuned for an election stunt later on this year – no tax returns for most salary and wages earners. Nothing substantive to tax rates, just fiddling at the edges.
The small business and superannuation changes are a direct bribe for the so-called Howard battlers – small business and their poorly paid employees. It’s an attempt to wedge the Liberals although I would have thought their obvious response will be to pr0mise a company tax rate cut to 25 percent paid for through ‘savings’ (in health, education and the public service).
But even then the Government will give some of the money back to the big miners in the form of a 40 percent taxpayer subsidy for their capital expenditure and pay for their roads, rail lines and ports.
They will use the rest to buy off small business and give up to $500 to low income workers for superannuation.
The Government’s strategy in an election year seems simple enough. Tax the big profitable miners (but not, note, those on average profit returns) and distribute the benefits to voters.
In this case those who will most benefit are small businesses (those with a turnover of less than $2 million a year) and low income earners contributing to superannuation.
But even the superannuation changes have a hidden sting. How do you think employers are going to react to the Government raising the employer Superannuation Guarantee rate from nine percent to 12 percent? Through wage trade offs.
That is already the response of the Australian Chamber of Commerce and Industry. Given that the union leadership traded off wage increases for a 3 percent superannuation guarantee payment when Keating was the world’s greatest Treasurer, they will do the same thing this time around.
The Government’s focus is on digging things up, things like coal that will increase greenhouse gas emissions. There is nothing in this tax package for renewable energy; no inducements or vision for solar, wind, geothermal or wave power.
A left-wing program would tax the rich and business, especially the polluters, and fund renewable energy. It would tax capital and benefit labour.
What Rudd Labor has offered isn’t tax reform, even for the bosses. It’s tax shuffling, buying votes for a July or August election.
It reflects the gutlessness of a Government whose great moral challenge is getting re-elected.