Dissenting report by Australian Greens
1.1
The Australian Greens do not support the majority report of the
committee which recommends the passing of the Tax Laws Amendment (Temporary
Budget Repair Levy) Bill 2014 and related bills.
1.2
The Government has attempted to frame the debate regarding the Budget
more generally as one of 'emergency'. This is incorrect; the Federal
Government still maintains AAA credit ratings from the three biggest credit
ratings agencies in the world: S&P, Moody's and Fitch; and Australia also
has one of the lowest debt to GDP ratios among OECD countries.
1.3
Despite the 'budget emergency', the Government has not attempted to
raise extra revenue. In fact, they have deliberately chosen to reject revenue
streams from the big polluters and mining companies, and subsidies continue to
be paid to fossil fuel industries.
1.4
The Australians Greens accept the need for responsible economic
management. Governments should balance their budgets over the economic cycle.
However, as many of the submissions to the inquiry outlined, the deficit levy
does not help address the long term structural issues of the Budget.
1.5
The Grattan Institute stated:
The Levy has no impact on the long-term structural position
of the Budget, as it will cease to exist in 2017-18.[1]
1.6
Mr Saul Eslake outlined:
It [the deficit levy] does not make any lasting contribution
to 'fixing the budget' in any structural sense.[2]
1.7
The levy is a 'political' fix for the Government so they can point to
the idea that as welfare recipients, pensioners and anyone visiting the doctor
are losing out, and so are high income earners. During his Budget speech the
Treasurer outlined that higher income earners would:
... pay a Temporary Budget Repair Levy that in effect increases
the top marginal tax rate by two percentage points, for people earning
more than $180,000 a year.
It is only fair that everyone makes a contribution.[3]
1.8
The Government has created a crisis and is now trying to persuade people
that they are all contributing to solving the 'emergency'. The reality is that
the current Government wants to protect high income earners. At a recent Senate
Estimates hearing Senator Cormann stated:
We are very conscious of the fact that higher income earners
already do a lot of the heavy lifting when it comes to contributing to
Commonwealth revenue. But, in the context of this budget, we decided and
judged that it was necessary to ask everyone across the community to make a
contribution, including asking higher income earners to make an additional
effort on top of the significant effort that they are already making.[4]
1.9
However, the Grattan Institute makes it clear that:
It does not share the pain very effectively, as it will
only have a short-term impact on high-income earners. By contrast, spending
cuts that will have a disproportionately large effect on lower income
earners are permanent.[5]
1.10
Not everyone is making an equal contribution; Mr Saul Eslake makes the
point that:
It will encourage at least some higher-income households to
take more active steps to engage in tax-minimization or avoidance activities,
including by making greater use of the myriad provisions in the income tax
system which offer preferential or concessional treatment for particular types
of income, forms of business organization or categories of investment vehicles.[6]
1.11
Making the tax increase permanent would go some way to minimising the
tax avoidance that will occur under the temporary levy.
1.12
While the Government's stated aim is about bringing the budget back into
surplus, the Prime Minister has been quoted in the media as saying:
The whole point of getting the budget under control now... is
so that we can give tax cuts in the not-too-distant future.[7]
1.13
This statement indicates the motivating factor for the way the Government
is attempting to sell its Budget to the Australian community. 'Everyone' does
the heavy lifting and then higher income earners end up with tax cuts, while
changes to welfare remain.
1.14
While welfare spending has been cut with little thought for the consequences,
the Government is delaying any decisions on long term structural changes to the
tax system. Tax expenditure arrangements which overwhelmingly benefit wealthier
individuals and companies have been sent to a white paper process despite the
fact that the Henry Review was completed in 2010 and includes broad-ranging tax
reform options.
1.15
If the Government was serious about structural reform they would
genuinely address growing inequality and the need for revenue, and a new
permanent higher marginal tax rate would have been proposed.
1.16
The Australian Greens recognise the structural budget issues, that is
why we have proposed long term structural changes to the tax system to raise
more revenue and reduce tax avoidance, including:
- apply a 'public insurance' levy on the big four banks that are
too big to fail: $11 billion (revised PBO costing as at MYEFO);
- impose a $2 per tonne levy on thermal coal exports: $929 million
(PBO pre-election costing);
- implement the original super profits tax on mining companies
$35.58 billion (revised PBO costing as at MYEFO);
- make millionaires pay 50 per cent on their income over $1
million:
$907 million (revised PBO costing as at MYEFO);
- reduce tax avoidance by taxing discretionary trusts (except those
set up by farmers) the same as corporations: $3.3 billion (revised PBO costing
as at MYEFO); and
-
retain the carbon price with revenue of around $12.55 billion.
1.17
The Greens will not allow the Government to use the hype of a so-called
budget emergency and the introduction of a temporary levy as part of an
ideological campaign that targets the most vulnerable and disadvantaged in our
community.
Recommendation
1.18
That the Senate not pass the bill in its current form, and instead pass an
amendment making the tax increase permanent with additional measures to
minimise tax avoidance.
Senator Peter
Whish-Wilson
Senator for Tasmania
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