Wayne Swan: Fairer tax for all workers
June 09, 2005
THE tax debate that's raging in Australia today pits fairness and incentive for all Australians against tax cuts for the very few. Labor offers a genuine reform package that recognises the aspirations of all workers all the way up the income scale.
On the other side is Peter Costello, with tax cuts pitched to very high income earners, leaving the great bulk of Australian families behind.
Unfortunately, this tax debate has been hijacked by what American author Benjamin DeMott calls junk politics, the replacement of long-term policy reform with meaningless, short-term political symbolism. The Coalition's junk politics fails our nation, especially in tax, where the chance to give incentive and fairness to every Australian was squandered on budget night.
That's why Labor took the high road, arguing that those seven million low and middle-income earners who work so hard to make our economy strong deserve decent tax incentives, not the tax-cut scraps offered by Costello.
It's true that our stance has caused some short-term political pain. But Labor's fundamental belief in fairness and aspiration runs too deep for us to be deterred by a few bad headlines or by the distortions of our political opponents. While some have argued that Labor's stance has been contrary to our political interests, nobody has yet made the compelling case that our fairer tax package is not in the national interest.
Much of the criticism has come from the usual suspects: those who were clamouring for Labor to ditch any perceptions of a small target but who quickly and shamelessly criticised us for putting a detailed alternative tax package and fighting hard for it.
We should never forget that this tax debate is about the living standards and aspirations of more than seven million workers, not just the political fortunes of politicians such as the Treasurer and me. That's why I believe Australian taxpayers will see through Costello's histrionics and recognise Labor is on their side.
After all, what would the Treasurer know about financial pressure? He's content to arrogantly toss middle-income earners only $6 a week, a tax cut that will be quickly swallowed up by the rising costs of food, fuel and health care.
John Howard and Costello are no friends of average Australians. Despite their claims to the contrary, successive changes to the personal income tax scales have left low and middle-income earners paying as much, if not more, tax than in 1996, with higher-income earners paying less.
For example a worker on average earnings (about $51,000 a year) will lose 22.5 per cent of their earnings in tax after the budget's proposed changes; the same average tax rate they faced in 1996. Workers on half the average wage will lose 15.1 per cent of their earnings in tax, a hike from the 12.9 per cent average tax rate they faced in 1996. It's a different story for higher-income earners. Those on 2 1/2 times the average wage (about $130,000 a year) will lose 33.4per cent of their earnings in tax, a cut from the 36.1 per cent average tax rate they faced in 1996.
So let's go beyond all of the political posturing and cut to the chase. This is a fight for fairness and aspiration between the Coalition, which thinks very high income earners deserve a tax cut 10 times bigger than the average worker, and Labor, which believes in a fairer tax cut for all; between the Coalition's view that only very high income earners have aspirations and a Labor Party that understands that all workers, whether on low, middle or higher incomes, have aspirations for themselves and their families.
Predictably, these fundamental principles have been ignored by Costello in his childish tirades on the tax issue. So smug and arrogant with power, Costello has deliberately avoided any substantive debate on the relative merits of the tax proposals. We have yet to hear anyone from the Coalition dispute Labor's tax plan is more equitable and still affordable. While they argue process, we argue fairness and incentive.
Labor's alternative would see eight out of 10 taxpayers, including all of those earning up to $63,000 a year, receiving twice as much: $12 a week compared with the Government's $6. Skilled workers and others earning up to $100,000 would receive an equivalent tax cut under Labor as under the Coalition package.
That's what makes the class warfare allegations of the Government so laughable. Labor is recognising the aspirations of workers all the way up the income scale. Under our plan, more than 96 per cent of taxpaying households will be better off compared with the Government's proposition. For example, a typical family with a combined income of $110,000 paying off a mortgage would gain a tax cut worth $1250 a year.
Given these stark differences and the unfairness of the Government's package, it's little wonder the Coalition wants to shift the debate to administrative issues such as tax schedules.
It's absurd to expect Labor to announce a position on the tax schedules before we've debated the legislation that the schedules seek to give effect to. Our position is that we will move our amendments to the legislation and argue for our fairer tax package for the great bulk of Australian workers. That's why we've consistently called for a debate in the parliament as soon as the Senate returns on June 14. Everything we do in this debate and its aftermath will be in the interest of this nation and its workers.
Australians deserve better than the junk politics of Costello and the shabby commentary of his allies. That's why Labor is fighting for fairness and for the aspirations of the more than sevenmillion low and middle-income earners who have worked so hard to make our economy strong and who look to Labor for genuine tax relief.
Wayne Swan in the opposition treasury spokesman
http://www.theaustralian.news.com.au/common/story_page/0,5744,15552659%5E7583,00.html
Fairer tax vs. tax cuts as soon as possible. Hmmm. Any thoughts?Treasurer Peter Costello: Give workers their tax cuts
June 10, 2005
WHILE Wayne Swan is eminently qualified to talk and write about junk politics, there are a few home truths about the Government's budget tax reforms that he missed in his column in The Australian yesterday.
First, the Government's tax changes give a tax cut to all Australian taxpayers. More than seven million taxpayers benefit from the Government's tax cuts. And they will benefit from July 1 - 21 days - if Labor gets out of the way and does not oppose the tax cuts.
Labor's plan is that everyone gets no tax cut on July 1. Because that is Swan's policy, he presumably feels good about blocking and delaying the Government's tax cuts that do start on July 1.
Swan's assertion that the Government is not offering a genuine reform package is plain wrong. The Government's tax changes are squarely directed at making Australian rates and thresholds more like those of other developed countries.
The Organisation for Economic Co-operation and Development economic survey of Australia for last year concluded that while the maximum marginal income tax rate is about the average by international standards, it cuts in at a relatively low level, which may harm work incentives and discourage skill acquisition.
The Government's proposed tax cuts bring Australia back towards the middle of the industrialised countries in terms of the top threshold. Of the 30 OECD countries, Australia will move from having the seventh lowest top tax threshold to the 16th lowest.
Swan's doctrine of envy politics also ignores that people who do not pay tax cannot receive tax cuts and people who pay very little in tax cannot receive big tax cuts. The Government's tax cuts have been and will be greater as a proportion of tax paid for low-income earners.
Let's look at the Government's record. Since 1999, the Government's tax cuts have reduced the tax paid at $10,000 by 53 per cent, at $20,000 by 33per cent, at $40,000 by 20 per cent, at $50,000 by 23 per cent at $80,000 by 25per cent and at $100,000 by 22 per cent.
Labor's claims about its tax proposals, which will never be implemented (you can't make L-A-W from Opposition), are a smokescreen to cover a desperate attempt by Swan to hide his advice to the Leader of the Opposition that he should muscle-up on tax while he had the Senate numbers to block tax cuts.
The only problem for Swan and his cunning plan, devised in the budget lock-up, to block tax cuts was that he forgot Labor lost the election and control of the Senate from July 1.
So what is Swan's real plan? Simply to deny all Australian workers a tax cut in a miscalculated public relations gambit. The Government, in contrast, wants to get on with the job and improve the living standards of the Australian people.
The budget sets out the achievements of the Government:
# A single person on average earnings will have received a 21 per cent improvement in real disposable income between 1996-97 and 2006-07.
# A single-income couple on average wages with two children will have had a 30 per cent improvement.
# A dual-income couple with an average income and 67 per cent of an average income will have had a 22 per cent real improvement.
Increases in family payments have also contributed to improvements in family living standards. For the families listed above, the point at which their tax is higher than the benefits received has increased in real terms:
# A single person on average earnings from $14,926 in 1996-97 to $16,649 between in 2006-07.
# A single-income couple on average wages with two children from $33,931 to $44,951.
# A dual-income couple with an average income and 67 per cent of an average income from $34,657 to $46,884.
I say again to Swan and the Leader of the Opposition: get out of the way and let Australian taxpayers get their tax cuts from July 1.
http://www.theaustralian.news.com.au/common/story_page/0,5744,15561936^7583,00.html
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