Treasurer Josh Frydenberg is floating bringing forward $158 billion worth of income tax cuts 鈥 originally scheduled for 2022 and 2024 鈥 arguing it will boost the COVID-19-ravaged economy. 聽He has hinted that the tax cuts would form a key part of the delayed federal budget, now set for October 6.
The Coalition pushed through three聽stages of income tax cuts last year: the first round delivered about $1080 in聽tax聽relief for average income earners. Stage two was due to come into effect from 2022 and would cut taxes for those earning more than $90,000 a year, as well as raising the threshold on the lowest聽tax聽rate.
The final stage was to begin two years later, and allow those earning less than $200,000 a year to pay no more than 30 cents on the dollar.
These are tax cuts for the rich.
As Michael Keating, former secretary of the Department of Prime Minister and Cabinet, said, they are 鈥渋ncredibly biased in favour of high-income earners鈥 and because of this 鈥渢he proceeds are very likely to be heavily saved, much more heavily saved than usual鈥.
In other words, the government鈥檚 pitch that such measures would be the 鈥渂oost鈥 the economy needs is wrong.
Former Reserve Bank deputy governor, Stephen Grenville, said cutting the top rate would be a 鈥渨eak stimulus鈥 and that it also 鈥渦ndermines the equitable and progressive聽tax聽structure we鈥檒l need when the COVID crisis is over鈥.
Another former Reserve Bank governor argued that spending on infrastructure, other than roads and transport projects, should be a priority.
He also criticised the Prime Minister鈥檚 new National Gas Infrastructure Plan, including an offer to prop up the gas industry with subsidies of $52.9 million.
鈥淚 was interested the other day when [the PM] was saying that, 鈥楲ook, if the private sector is not going to jump in and provide a gas-fired power station, the government鈥檚 going to do it鈥, Fraser said.
鈥淲ell, the private sector鈥檚 not providing any social housing either. And yet, providing social housing would be a tremendous economic stimulus, and would also be a lasting benefit of the social kind.鈥
Keating and Fraser are among 40 political, economic and social policy experts backing a campaign to oppose tax cuts for the well-off, launched by the progressive think tank The Australia Institute (TAI). Nobel Laureate Professor Peter Doherty and Australian Council of Social Service chief executive Cassandra Goldie have joined it.
The TAI campaign says: 鈥淭hose demanding聽tax聽cuts聽today will be demanding service聽cuts聽tomorrow.
Its that 鈥淭ax is an investment in society鈥.
鈥淎fter decades of tax cuts, all we鈥檝e seen is more inequality and fewer services,鈥 the petition notes. It estimates that if the income聽tax聽cuts聽are brought forward, the wealthiest Australian will be taking home an extra $11,000 each year.
AI said that cutting the Jobseeker payment by $150 a week at the end of September will mean that at least 370,000 people will fall below the poverty line, including 80,000 children.
Meanwhile, the government鈥檚 鈥渘ew technology road map鈥, which it argues is key for the economic recovery, is heavily weighted towards new investment in gas fields and gas-fired power projects for our future energy needs.
The combination of tax cuts for the well-off, together with the fantasy of a gas-fired transition to a renewable energy future, will not only accelerate Australia鈥檚 contribution to the looming climate catastrophe, it will also widen the gap between the very rich and the rest of us.
The upcoming federal budget looks like a disaster in the making.
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