Tax the rich, not cut public services
Posted by John, July 15th, 2010 - under Gillard Government, Gillard Labor, Public services, Social services, Tax, Tax the rich.
Yes, the upcoming campaign will have strong elements of ‘clean’ and ‘green’ but above all else it will be very lean. There will be hard choices and some unpopular cutbacks…
Prime Minister Julia Gillard at the National Press Club on Thursday
Not only that but for every spending commitment from Labor there will be an offsetting spending cut.
Am I missing somehting? Last week Gillard cut a deal with the big 3 mining companies to gut the mining tax to such a degree that it will cost us around $14 billion.
Keeping the mining tax in place would have enabled the Government to increase spending on health, education, aboriginal disadvantage and climate change measures. Instead we will be ‘faced with unpopular choices’.
What sort of unpopular choices does she have in mind? Here’s a guide, from Gillard’s speech at the Press Club again.
The sectors which may need renewal and reform are often those that were relatively untouched by the Hawke-Keating reforms – sectors like health and education that meet essential public needs, delivered largely within the domestic economy. Hospitals, aged care facilities, childcare centres, schools, and employment services – all services with a diverse range of providers from the public, private and non-government sectors, and services where competition and value is often held back by jurisdictional red tape and the lack of seamless national markets.
The implication is clear. Gillard will attack public services to continue to fund her largesse to big business.
In all the rhetoric about fiscal rectitude and return to surpluses (code for cutting vital public services) there was not one mention about increasing taxes on the wealthy to pay for better health, education and aged care services and to move society to renewable energy.
In a speech in February Deputy Commissioner of Taxation Jim Killaly said that 40 percent of big business (those with a turnover greater than $250 million) had paid no income tax in the three income years between 2006 and 2008. He also said twenty percent of those companies were actually making accounting profits.
Analysis by Adele Ferguson and Stuart Washington in the 13 March edition of the Sydney Morning Herald showed that most industries actually pay much less than the headline 30 percent company tax rate. For the finance sector for example they found the figure was 20 percent.
In other words almost half of all big business pays no income tax and those that do mostly pay much less than the notional 30 percent headline rate.
A progressive Government would make the tax system more equitable and force all big business to pay tax. It would tax the super profits of miners. It would use the extra revenue to provide more and better services to the poor and working class, not cut them.
Gillard Labor is not that Government.
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Comments
Comment from DR
Time July 16, 2010 at 9:19 am
A progressive government? Is some form of radical alternative being argued for? Should we care about the platform? Don’t hold your breath.
http://www.sa.org.au/component/content/article/2805-federal-election-2010-this-is-no-choice
“In coming elections Socialist Alternative advocates giving a first preference vote to either Labor, the Greens or others who are genuinely left-wing, like socialist candidates, and putting the Liberals last…”
As one bright spark pointed out:” we recommend that you choose to support (with your vote) either a capitalist party, a petty-bourgeois party or a socialist party, as long as you vote against the Liberals.”
Comment from Dong
Time July 16, 2010 at 10:54 am
It doesn’t actually cost us anything. It gains 10.5 billion more than we would have got if she had let the whole thing go like the opposition and the miners wanted. 10.5 is better than zero but it is a shame the government backed down. Don’t forget though that the opposition don’t even want that. They will drop the tax and cut public services.
Comment from Marco
Time July 16, 2010 at 8:17 pm
John,
From a pragmatic and immediate point of view we can see ourselves in the mirror of the UK, Germany and other European countries.
Let’s start with the UK; we can talk about Germany and other countries in a future opportunity:
(1) The UK Government is cutting down their deficit to the tune of 11bn pounds a year.
Budget: Radical shake-up of benefits to cut spending
http://www.bbc.co.uk/news/10380692
(2) These cuts will be financed by a 77% cut in public services (!!!) and a 23% tax increase:
Budget key points: At-a-glance
http://www.bbc.co.uk/news/10374475
(3) The services cut include pretty much everything from Jobseeker Allowance (i.e. the Aussie Newstart Allowance) to pensioners allowance.
See Budget: Radical shake-up of benefits to cut spending above
(4) A great part of the increase in taxation will be achieved by an increase in VAT (value added tax, equivalent to our GST), from 17.5% to 20%. This tax targets consumption, not saving. To evaluate the importance of this for people on low incomes, suffice it to say that I don’t know many people on low incomes who can save.
Budget: Harman says ‘reckless’ Budget will hit the poor
http://www.bbc.co.uk/news/10377159
(5) Is questionable whether this targeted “fiscal austerity” measures are really required. A case can be made that they will be counter productive; however, a complete discussion of this goes beyond the scope of this post. In any case, these measures will have an immediate effect in slowing down the weak recovery already under way: for 2011, according to the Budget’s estimates, GDP should grow by 2.3% (versus a growth of about 3.3% without the “austerity” measures) and unemployment will grow to 8.1% this year (by February 2010 the figure was 7.3%).
Make no mistake: whatever sweeteners were included in the Budget, it is the low income fraction of the population who are paying for these “austerity” measures.
Now, let’s be pragmatic. As terrible as this is for our brothers and sisters in the UK, the damage is already done and there’s nothing we can do about it.
But I am worried about us, here in Australia. And we still are in time to try and do something about it.
Comment from John
Time July 16, 2010 at 9:41 pm
Thanks dr. Presumably the Socialist Alliance is going to have the same question posed of it in allocating preferences. Based on past experience you will preference the Greens – that petit bourgeois party you criticise Socialist Alternative for referring to. It is also problematic to call the labor party a capitalist party, without more, given its links to the working class through the trade union bureaucracy. But that is a debate for another day.
And how is the Socialist Alliance socialist? In its composition? in its policies? In its electoral orientation? In its structure?
I think you misunderstand the audience – we are trying to appeal to those workers who have differing views about the election by saying first and foremost Yuk what a choice. For the forces of the Left, trying to relate to where the vast majority of workers are in the heightened poltical atmosphere of an election seems to me to be appropriate – and a propaganda statement about there being no choice between the two major parties echoes the feeling among some workers and others.
The vote for X Y or Z is secondary for us, and is but part of the wider agenda of Yuk, what a choice, and we will have to fight no matter who wins, to relate to class conscious elements or those angry with the system – some of whom will hold their nose and vote Labor, some of whom will have illusions in the Greens and vote for them, and a very very small number who will give their first preferences to the Alliance.
The Alliance seem to be almost counterposing yourselves to parties with real support in society.
If the Socialist Alliance were a real force in society we would consider calling for a vote first for them. But, unless you have delusions of grandeur, you (like us) are not a force in society either electorally or industrially or, even movement wise.
By the way, despite the stink of stalinism that in my view infects Socialist Alliance, if I have the chance I will vote for them.
Comment from John
Time July 16, 2010 at 9:45 pm
Dong, I think you missed my point. Gillard is saying there will be cutbacks. I am saying taxing the mining companies under Rudd’s proposal could have delivered up to an extra $14 billion and then there would be no need for cutbacks.
So it will actually cost us quite a lot in cuts to services after the election – to public transport, hospitals, education systems, and with no money for action on climate change.
I also highly doubt the $10.5 billion figure. BHP has actually produced a report saying it won’t pay any more tax than it currently does until 2016 and then the estimates are its total tax bill will go up a massive 2% (assuming current company tax levels.) By then the company tax rate will have been cut by about 5% I would guess so that in fact BHP will pay less than as a percentage in taxes state and federal than it does now.
Comment from John
Time July 17, 2010 at 8:26 am
dr I ask that question about the socialist in organisations’ names because I ask it about mine too. For Socialist Alternative we are a small propaganda group who looks to involve itself in campaigns when they exist and we can and to educate ourselves to involve ourselves in the struggles of the future as a bigger organisation able to influence events.
Comment from DR
Time July 17, 2010 at 5:18 pm
Wow, John! You’re scary.
Comment from John
Time July 17, 2010 at 6:13 pm
How am I scary dr? Don’t leave us in suspense. Go the whole hog. Lambast away.
Comment from al loomis
Time July 16, 2010 at 8:48 am
of course she isn’t any kind of progressive leader. do you expect a democratic outcome from an evolved feudalism?
if you want rule for the people, you must get rule by the people. no visible chance of that happening, in a society where ‘progressives’ are people who hope for a kind master.