With tonight’s Budget looming large over proceedings, the Q&A panel talked tax cuts and their real-world repercussions, or lack thereof.
Following the ABC’s report on Monday that low and middle-income earners will get tax cuts worth up to $10.50 a week in the Budget, Labor MP Linda Burney pointed out that doesn’t amount to a whole lot when a cup of coffee can cost about $5.
Nor surprisingly, the Government’s Tim Wilson argued otherwise, calling it “relief that people need”.
Everyone agreed wider-reaching tax reform was needed, with proposed tax cuts for banks in particular coming under close scrutiny.
Federal Liberal Member for Goldstein Mr Wilson and the opposition spokesperson for human services Ms Burney were joined by environmentalist Stanley Johnson, design disruptor and cultural provocateur Leyla Acaroglu and Jeremy Heimans, co-founder and CEO of Purpose.
Do tax cuts even work?
Mr Wilson thinks so, but said part of the problem is people aren’t dying at 68 anymore.
“The people who are earning, paying the taxes aren’t necessarily the people who are getting the benefits of the tax,” he said.
“If you do a proper analysis of the tax system over life cycles, at the moment the people who are aspiring to opportunity and to achieve things for security for their family are actually paying the most tax and the people who hold the most wealth or a portion of the most wealth are paying the least tax.
“There’s a difference between having wealth and earning income.
“And the tax system was set up on the assumption they would die at the age of 68 and we’re going to have to confront that reality.”
Don’t get hooked on the $10-a-week thing, Mr Wilson explained, saying this would just be the start.
“That’s only one step towards bigger tax reform which is what I’d like to see. It is relief that people need,” he said.
“The reality is there are huge pressures on families and households and it will enable people to stimulate the economy more and employ more people.”
Ms Burney said two cups of coffee per week was not a “decent” enough tax cut.
“I think that when you’re having a look, if you’re going to reform the tax system then proper reform it,” she said.
“And make decisions that are going to assist people in the best way and assist those that need the cut.
“And we have been arguing consistently against this huge company tax cut because we think that $65 million could be better spent in the sorts of things I’ve mentioned, including hospitals, education and the like.”
‘Move on from the old tax cuts thing’
Mr Heimans said Australian politicians are living in the 90s, with Dr Acaroglu agreeing we are stuck in an ineffective cycle.
“We should work to push on things like the tax cuts and say, ‘Can’t we be more bold and more imaginative as a country than just to whip out the old tax cuts thing again?'” Mr Heimans said.
“There are so many opportunities for progressive economic policy; retrain and offer life-long learning to every Australian, opportunities to incubate small businesses.
“So the idea we’re stuck in this time warp where, as all the economic evidence is this doesn’t work.
“Real wages are stagnant, while corporate profits go up 20 per cent a year, and we’re stuck having the debate about business tax cuts. We can do better as a country.”
Dr Acaroglu said there are more creative ways the Budget could be used.
“An extra $10 a week that’s going to make me vote for you or someone else, it should be about dedicating that kind of economic surplus to collective benefits,” she said.
“So whether it be addressing catastrophic recycling disaster situation wee have going on or perhaps protecting the Great Barrier Reef or any other natural resources we would probably donate $10 a week to see protected and conserved for our future generations which is what intergenerational equity is about.
“You guys with the power making sure you make decisions today that don’t screw it up for the rest of us.”
Wait, why are the banks getting tax breaks as well?
Much ire was drawn at the Government’s existing promise to cut company tax, a move that would benefit the banks. The same banks currently being drawn over the coals by a royal commission.
Mr Johnson, author and father of British Secretary of State Boris Johnson, said perhaps the timing of that wasn’t the best.
“Speaking with all the humility of an outside observer, I do wonder whether just at this moment this is the moment to give the bankers a tax cut,” he mused.
“I think … you have plenty of other things to do. I rather wonder whether banks need to be right up there in the firing line in terms of getting the tax cut. Couldn’t they hang around a bit?”
It’s not that simple, Mr Wilson explained. The cuts will be for a wide range of companies, of which the banks happen to be a part.
“All the companies that are above the threshold will get the tax cut and enable them to go on and create jobs and create the opportunities for the next generations of Australians.
When asked if the banks could be excluded from the benefits, he said it was unlikely.
“I suspect not because you don’t want an environment where you’re creating special classes of businesses that get tax cuts,” Mr Wilson said.
“Not all banks by the way that are covered by the tax cuts have been caught up in problems in the royal commission.
“It’s a bad policy position which will inevitably only lead to where we pass moral judgements on who pays tax and how much?”
Wait to see what happens in the Senate, Ms Burney said.
“The tax cut has not passed the Senate. And that’s a really important point to keep in mind,” she said.
“I think that there is absolute shock on what’s coming out of the royal commission and the idea there’s going to be a big chunk of the company tax cut given to the banks I think is worrying many Australians.”
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