The Labor Opposition’s election costings released today show its plans to close high-end tax concessions and shelters will raise $13 billion a year by 2022, allowing a Labor Government to invest an extra $11 billion in services, such as dental, child care and cancer treatment, and in public infrastructure.
The Opposition plans to save another $14 billion in 2022-23 by not proceeding with the Government’s high-end tax cuts, allowing the Budget surplus to reach 1% of GDP ($22 billion) in that year.
While the Coalition Government considered curbs on franking credit refunds, cut tax deductions for landlords, introduced a Multinational Anti Avoidance Law and capped tax breaks for large super fund balances; it opposes the Opposition’s more comprehensive tax reforms including ending negative gearing, reducing Capital Gains Tax breaks, ending franking credit refunds, and clamps on tax avoidance through private trusts.
Instead, the Coalition relies on budget costings that assume the cost of services and social security payments will fall by $28 billion over the next four years, to make room for its $35 billion in annual tax cuts from 2024. See ACOSS analysis.
ACOSS CEO Dr Cassandra Goldie said:
“Closing high-end tax shelters, as Labor has committed to doing, will give us peace of mind that we can begin to restore funding for the services we need, such as quality education, health, aged care, childcare and a decent income support system.
“Currently, we have people waiting more than a year for dental care and for in-home aged care. And we must not forget that we still have 3 million people, including 740 000 children, living below the poverty line or that the most effective way to tackle our consistent poverty rates is by increasing Newstart and Youth Allowance.
“In a country that has the eighth lowest tax revenue in the OECD, we cannot afford more large tax cuts like those that undermined the Commonwealth budget in the 2000s.
“While the Coalition Government says it will ‘guarantee’ funding for essential services, its rejection of action to close high-end tax shelters together with its unprecedented tax cuts will make this difficult. Instead, the Government relies on budget projections that real growth in the cost of the services governments provide will fall by half over the next four years, including just 0.7% real growth in health funding each year. This makes its promise of $35 billion in tax cuts in 2024 – five years into the future – a very risky proposition.
“The Opposition’s costings show that by reforming the tax system to make it more equitable, we can improve our essential services and better safeguard their future.
“However, our main concern with the Opposition’s costings is the arbitrary assumption that tax revenue will remain below 24.3% of GDP, the level reached under the Howard Governments. This ‘assumption’ must not become a hard ‘cap’ on revenue like the Government’s policy to limit tax to 23.9% of GDP. Arbitrary caps on budget revenue or expenditure are dangerous because they confine future ability to provide the services people need. Labor sensibly rejected the Government’s 2022 and 2024 tax cuts on the grounds that it was too risky to lock large tax cuts in so far in advance. Hard revenue or expenditure caps should be rejected for the same reason,” Dr Goldie said.
