UPDATE: The Labor Party has capitulated to Scott Morrison’s demands and voted in the House of Reps to hand a $95 billion tax cut to Australia’s highest income earners.
Only two lower house MPs voted against these giant tax cuts, including the Greens' Adam Bandt, but we can still stop Morrison and the Libs from handing billions to people that don't need the money if Labor grows a backbone and votes with the Greens in the Senate.
These are tax cuts for people who need them the least. These cuts will inevitably rip revenue from the budget that should be going to schools and hospitals, to essential services and to our communities…not going into the pockets of high-income earners.
We can't afford it. We don't need it. This money should be spent on creating a better society.
What’s The Problem?
The government’s $158 billion tax cuts package has three parts. While stages 1 and 2 are geared more towards lower and middle-income earners, stage three (which doesn’t take effect until 2024-25 and did not need to be passed by the parliament) is by far the most expensive and is targeted to those people on the highest incomes.
That’s why it is so disappointing that Labor allowed Stage 3 of these tax cuts to pass.
This third stage will cost Australian taxpayers $95 billion over the next 10 years. The overwhelming benefit will flow to people on the highest incomes, with 60% of the money from this stage will flow to just 1 in 5 taxpayers.
This means tax cuts for politicians, bankers, and chief executives. It’s a tax cut of $11,000 to people already earning $200,000 a year… and it’s being paid for with money that should go to the things that benefit everyone.
We know that the ‘trickle down’ benefits of these tax cuts - that if you give tax cuts to people at the top, people on lower and middle incomes will also benefit - is a myth. This type of thinking has failed us for decades, with the Liberals and Labor continue to perpetuate the lie.
Labor’s backflip
The Labor Party has staunchly opposed these cuts in the past, but in the first sitting week of this new parliament they have gone back on their word to the millions of people who voted for them at the federal election.
Here’s what they said in the lead up to the federal election in May:
“We think that stage three - at a cost of some $95 billion down the track ... is really a triumph of hope over economic reality.” - Anthony Albanese
“For too long now, the Government has tried to pretend that tax cuts for high-income earners, which wouldn't come into being for another five years, will somehow help the economy now. That is a joke, and people are waking up to it.” - Jim Chalmers, Shadow Treasurer
“A dollar spent on tax cuts for the wealthy is a dollar not spent on extra teachers or nurses or paying down debt.” - Chris Bowen, Former Shadow Treasurer
Why This Matters?
This tax package will make economic inequality much worse in Australia.
The Greens have heard the community concerns about these tax cuts and the harm they will cause. We have listened to economists, the not-for-profit sector and the experts.
The Grattan Institute has found that Stage 3 will make income tax the least progressive it has been since the 1950s, at a time when we should be ensuring everyone in Australia has the things they need to live a good life.
When the package is fully implemented, the top 15% of income earners will be paying a lower share of their income tax than they currently do, while middle-income earners will be paying a higher share.
The Australian Council of Social Services has said that these cuts will mean cuts to essential community services, with young people, single parents, people who are unemployed, First Nations people and people with disability most likely to be affected.
This is $95 billion that could otherwise be spent on the things that benefit our entire community - including our public schools, public hospitals and public transport.
What We Should Be Doing Instead
The government’s tax cuts aren’t fair - they’re also not what people want. 78% of people say that investing in health and education is more important than tax cuts for high-income earners.
People want their taxes to be put to good and proper use, in public services that support our communities.
Instead, this tax cut is a $95 billion cut to services where they’re needed the most. It’s a cut to public schools. It’s a cut to public hospitals and public health services. It means we cannot afford Medicare-funded dental care, or invest in faster, better public transport.
Rather than tax cuts for millionaires and other high income earners, we could be doing so much more.
Some alternatives to this massive tax cut include:
Bringing Dental into Medicare: $44.9 billion
Raising Newstart by $75 a week then index at wages growth: $55.1 billion
Making childcare completely free for 80% of families: $77.3 billion
Lift all public school funding to meet the necessary resourcing standard: $30 billion
Create thousands of jobs restoring our environment and end extinction crisis: $20.3 billion
Roll out the necessary aged care home packages: $23.4 billion
Build 500,000 affordable homes and end housing crisis: $84.4 billion
Build High-Speed Rail along the East Coast: $27.8 billion
What’s Next?
The passage of these tax cuts is disappointing - but there’s still a long way to go.
Regardless of what happens in the senate this week, we will ensure that this issue is firmly on the agenda at the next election. We campaign for stage three of these tax cuts to be repealed, and we will be calling on all parties to support the Greens on this issue.
Best regards,
David James Connolly
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