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September 2013
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If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
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Sick kids and paying upfront

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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The GST has never really been off their ‘tax the workers’ agenda

Upsizing Tax

It should come as no surprise that here in Canberra ACT Labor Party Chief Minister Katy Gallagher supports an increase in the Goods and Services Tax (GST) and broadening its base.  It was Labor ‘Messiah,’ the neoliberal Paul Keating, who first proposed a broad based consumption tax for Australia in 1985 and only backed down when the unions got cold feet at the last minute.

Like Colin Barnett, Gallagher runs a capitalist government looking for more revenue.

What better way to do that than to increase the tax burden on the poor and working class? That essentially is what consumption taxes do.

The specific GST proposals being floated would see the rate increase from its current 10% to say 12.5% and/or include currently exempt items like fresh food, health and education. Removing those exemptions would add about $15 billion to the revenue of the States and Territories.

Gallagher disguised this class reality with talk of an efficient tax. Yes, the GST is efficient. These are taxes that impact less on capital accumulation than other types of taxes.

So when policy makers and politicians talk about efficient taxes what they often mean is taxes that impact more on workers and the poor but less on capital and the rich.

Finding ways to tax the working class more and capital less was effectively what the Henry Tax Review was about.

There are a few reasons for this. First the demands on government for services will continue if not increase given for example an aging population.

Obviously cutting social welfare spending and spending on public health and education would reduce the need for revenue and that has been part of the policy response of both parties over time.

Too brazen an attack on government expenditure might produce a concerted backlash. Social stability is an aim of major sections of capital because they realise that class peace is the best environment for business and profitability.

Second, reliance on income tax ties revenue raising very closely to the health of the economy. That is true but less so for consumption taxes, especially if essentials like fresh food, health and education are included in the tax base.

Land taxes are also efficient and more likely to raise revenue from the working class in both good and bad economic times. The Gallagher Labor government is in the process of replacing over the long term stamp duty on conveyancing with increased land tax to position itself in the future with a stable tax base on the working class. I note that I, like many current home owners, will bear the burden of both.

Third, international competition for funds will force the Australian government to cut taxes on mobile capital. Taxes on labour – the GST and land taxes – are the obvious replacement.

The Abbott government’s strategy seems clear enough. Any changes to the GST are off the agenda this term.

However there will be an Abbott government white paper on tax, a comprehensive review which will include the GST. An Abbott government could then take any recommendations on the GST to the 2016 election.

It is the Howard strategy all over again. Proclaim that tThere will never ever be a GST and then develop proposals for one to take to the next election. The Coalition by the way won only 48.9% of the 2 party preferred vote at that 1998 election but won a majority of seats. It is fair enough to say the majority rejected the GST.

Increasing the GST and broadening its base has been on the agenda of business for a long time and is the sotto voce policy of the Liberals.

There is an alternative to finding new ways to tax workers and the poor. Tax the rich. Here are a few examples.

A one percent wealth tax on the top 20%, who own over 60% of Australia’s wealth, would raise $40 billion a year.

Abolishing the superannuation tax advantages for the top ten percent would save up to $10 billion a year.

Quarantining negative gearing on rental properties against future rental income would reap up to $5 billion.

Removing the 50% capital gains tax concession on assets held for more than 12 months would raise billions.

Imposing a real resource rent tax would raise $10 billion a year and not impact at all on the capital accumulation process.

Abolishing all business tax concessions would raise up to $10 billion.

There are many more examples that I and others could come up with. Instead of supporting a greater tax burden on workers and the poor, Labor and the Greens should be shouting ‘tax the rich’ from the rooftops. They aren’t because they too accept the basic precepts of capitalism and its main recipe for action, neoliberalism.  They accept trickle down theories. Evidently what is good for Gina Rinehart is good for us all so taxing the rich is off the agenda.

We will have to fight for an environment in which taxing the rich becomes acceptable and that can only occur if there is a shift to the left in society. That is only likely to happen if major strikes and mass mobilisations around issues like war, refugees and equal love break out.

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Comments

Comment from Chris Warren
Time September 27, 2013 at 9:23 am

The capo argument for a GST was its supposed efficiency compared to sales tax and etc.

However the GST created a lot of paper-work onto business who now have to identify their value-added as well as identifying which category of tax liability their goods and services fit into.

While there is a range of tax-the-rich alternatives, why not just tax capital directly.

The value of ASX trades from just top 20 listed companies is around 2 billion per day.

See: http://www.asx.com.au/data/dw_sharesbyvalue.pdf

This probably reaches 500 billion per year.

A low tax on all financial market transactions may well eliminate either PAYE or GST.

The tax has to be low to avoid capital flight as offshore markets are seeking to become centres for world trades.

Surely a tax on flowing surplus, would be the most efficient and equitable tax available.

it passed

Comment from Normand J. Mccormick
Time September 27, 2013 at 9:50 am

So we all know that Abbott will raise taxes and make spending cuts. These cuts will force the states to raise their fees and taxes. Sounds like blood in the water. I’d much prefer a better mining tax and a targetted carbon tax coloured by a certain politicians oath (when he can’t afford to repeal it), than the Coalition’s flawed plan for a recession.

Comment from Gavin R. Putland
Time September 27, 2013 at 10:34 am

As a matter of interest, it’s possible to move the tax burden from labour to consumption with little or no increase in the cost of living, while restoring full employment: http://t.co/7WTLA9Bzq3 . But mainstream proponents of raising the GST are not promoting that method. It’s as if slugging the poor is the essence of their agenda.

That said, the optimal revenue base is land — as implied by Ramsey’s classic 1927 paper on optimal taxation: http://t.co/wf8Ea4W2ON .

Comment from Don Sutherland
Time September 27, 2013 at 4:40 pm

Thanks for a useful summary of the overall direction of the Abbott government’s strategy to tax the working class more (worked out with the BCA and key TNC’s). One important point re our strategy: the defeat of keating’s GST – a few unions did get cold feet, BUT I was a member of one in a group of unions from the left that campaigned publicly and actively against the keating proposal. In my view that’s why he retreated. It was an all too rare example of left unions acting idnependently of ALP priorities. We need more of that in the future.