Stage three tax cuts: Are they justified?
The only explanation that the Prime Minister seems to be able to come up with to justify going ahead with the Stage Three Tax Cuts is that Labor had committed itself.
Yes, Labor promised to keep the wealthy and privileged tax cuts. Because of the circumstances at the time, they were legislated.
Since the election and the disclosure of Australia’s authentic debt, with the enormous amounts required to finance campaign commitments, repair the NDIS, and care for the elderly, the imperative for the cuts is now unwarranted.
The Stage Three Tax Cuts will overwhelmingly benefit the rich, but will they help the economy? The short answer is “no.” Those who benefit from the reductions won’t spend it and will probably invest it in accumulating more wealth. Nor would it encourage them to work any harder.
Given there are so many justifications for cancelling the cuts, Labor is afforded the opportunity to demonstrate the philosophy they talked about before and during the election campaigns.
That being equality; a fairer society.
Giving the tax cuts defies logic when stacked up against the reasons not to. They will not improve equality.
When talking about Labor’s carbon tax, I think it was Tony Abbott who said something like anything you can legislate; you can be un-legislate.
Analysis by the new parliamentary budget office projects that the wealthiest 1% of Australians will benefit as much from the stage-three tax cuts as the poorest 65% combined.
When asked at the August 29 National Press Club luncheon if the stage three tax cuts would go ahead, some journalists interpreted the Prime Minister’s answers as unequivocable, but others thought he left a little wiggle room. It’s hard to find an economic journalist who openly supports the cuts, and even MPs like Coalition backbencher Russell Broadbent find them ludicrous and called for them to be axed.
Mind you, the very same journalists cunningly and currently suggesting they abandon the legislation will be the same ones who will denounce them for their hypocrisy if they do.
Labor is certainly caught between a rock and a wrong place. Where has all that love and compassion gone? The fork in the road where economics meets equity.
It is often difficult to distinguish a change of mind from a broken promise, particularly in politics. It takes courage to change your mind for the greater good.
The Australia Institute has made some pertinent points about the Stage Three Tax Cuts.
- Stage 3 tax cuts mainly go to high income earners with those earning more than $200,000 receiving a tax cut of $9075 per year, with CEOs, all federal parliamentarians and surgeons winning big.
- Those earning less than $45,000 will get nothing from the stage 3 tax cuts, with aged workers, disability carers, bakers, hairdressers and minimum wage workers among those worst off.
- If the Low and Middle Income Tax Offset is not extended, it will end this financial year & will mean 90% of taxpayers will be paying more tax.
- Even after the stage, 3 tax cuts come in, 80% of all taxpayers will still be worse off.
- The LMITO goes to middle-income earners with a maximum rate of $1,080. If the LMITO is not extended in the budget later this month, occupations like teachers, nurses and midwives will be paying $1080 more in tax.”
“Our research reveals that under this plan, billionaires benefit while battlers get slugged,” said Chief Economist Dr Richard Denniss from independent think-tank the Australia Institute.
“How is it reasonable that a bank CEO earning $5.2m a year will be given a $9,000 tax cut, while someone working in aged care or on the minimum wage receives nothing?”
At $243 billion, it is a considerable commitment when there is so much debt and so much screaming out to be done or repaired.
When questioned, Albanese has repeatedly stated that Labor has not “changed our opinion” on the tax plan. A plan that he had initially opposed.
“Parliament made a decision to legislate those tax cuts, and we made a decision that we would stand by that legislation rather than relitigate it.”
Poverty is a political choice.
By refusing to raise JobSeeker above the poverty line, but locking in tax cuts for the rich, Labor is choosing to leave hundreds of thousands of people in poverty.
Billionaires like Clive Palmer don't need more money. People on JobSeeker do.
— Adam Bandt (@AdamBandt) August 29, 2022
The notion that a few privileged individuals can own the vast majority of a country’s wealth and the remainder own little is on any level unsustainable, politically, economically or morally.
To retain its present support, Labor must demonstrate that it’s indeed a party of left-forward thinkers and willingly display its ideology to one and all. These changes make the tax system far less progressive.
The Guardian reported that the cuts “would abolish the 37% tax bracket, lower the 32.5% bracket to 30%,” and increase the top tax bracket to “start at $200,000 compared with $180,000.”
At the National Press Club, the Prime Minister stood firm on the Stage Three Tax Cuts:
“Prime Minister Anthony Albanese has reaffirmed his party’s commitment to keep stage 3 tax cuts for high income earners, despite growing calls for them to be delayed or scrapped.
Speaking at the National Press Club in Canberra for the first time as Prime Minister, Mr Albanese urged voters to look at the history of the party’s position on the tax cuts package.”
Ostensibly, the public owes a debt of gratitude to Albanese for the downfall of a rotten Prime Minister and a rotten Government. Our days seem less stressful without Morrison’s verbal lying assaults on all things Labor. And whilst on the one hand, Labor has performed well, on the other they have left many things untouched.
On the plus side, Chris Bowen has performed well turning around Australia’s climate policy, but many are questioning how much more they could have done. There has been a dispiriting decision to open vast areas of Australian waters to new oil and gas exploration. It is also pushing ahead with new coal and gas, regurgitating and ignoring a clear mandate to do more.
Yet another disappointment has been Albanese’s inability or lack of desire to remove his predecessor’s “obsession with secrecy”, though Question Time has shown slight improvement.
We live in a failed system. Capitalism does not allow for an equitable flow of economic resources. With this system, a small privileged few are rich beyond conscience, and almost all others are doomed to be poor at some level.
My thought for the day
The basic test of any nation surely must be the manner in which it treats its most vulnerable.
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13 commentsLogin here Register here
The stage three tax cuts aren’t scheduled to come in until 2024 , so for Labor it is not a priority to make a decision on these cuts.
If introduced in 2014 these cuts represent $243 billion over ten years in lost revenue to the government – that is not sustainable.
When Morrison introduced these tax cuts in 2018 the coalition were then forecasting that the deficit would be eliminated and that Labor’s debt would be significantly reduced. Since those heady days we have had COVID and the deficit now stretches into the future with the coalition accumulated net debt of one trillion dollars.
I expect that Labor will defer these tax cuts, probably in 2023 when we see how the deficit is looking (crook !) and what the coalition debt situation is (also crook !) and of course what inflation is doing to the economy (crook again!).
When the circumstances change a rational leader will adapt accordingly – it’s up to Albo.
I am with Terence on this one, no rush to make a decision. The governemnt is busy building up political capital to withstand the barage that will come. Its ploy is to severely weaken dutton to the point ” a broken promise” cry will be heard but It wont hurt politically. So lets no get carried away with the politics for now. Everyone knows its shit policy, everyone except morrison.
Rock and hard place indeed. We all know how much dirt will be dumped on them from the Opposition, the media and indeed many voters of “broken promises”. Our intelligence is completely ignored, we can understand the fundamentals here and would welcome a sensible explanation as to why these cuts can’t proceed, especially if an alternative which favours the low end was put forward. Raise the tax free threshold for everyone under $100k. Save thousands for people in minimum wage, that’s as good as a wage rise for the moment.
Over $100k the TFT remains as it is. Not hard to manage.
Albo has long been known as an astute politician who has never deviated from his Labor values. The fact that the Libs couldn’t find any dirt on him says a lot.
Allbo has always been cautious and a considered thinker.
What all those baying for immediate action, the tax cuts are a while off yet, and the Albanese government has yet to hand down its first budget. They will need time to examine all the legacy of the previous government. I find it interesting that it is the mainstream media that is setting the agenda and crying about the 3rd stage tax cuts.
The thing I can’t get past is the assumption that voters choose who to vote for because of the entirety of their promises?????
I didn’t vote ALP in May as I had a Treasurer to get rid of, but in other circumstances my vote would have gone to Labor to begin real action on climate change and improve welfare, education, workplace relations and a plethora of other good policies but I would never have voted for the stage 3 tax cuts.
This black and white, mandate nonsense surrounding elections and voting is taking up far more political space than it is worth and stands as a fig leaf for governments to shoehorn voters on unpleasant policies.
This vomit inducing bullshit from the most corrupt and greed driven party the country has ever had. Hahahaha…snort…bwahahaha…cough, choke, gasp…DoPe, you are hilarious…oh,wait, you’re being serious. Must find my brown paper bag to help slow the hyperventilation from laughter.
I will give them to the Budget to see what direction we are heading in, thankfully a truly rotten gov was removed for something looking like a gov. But Anthony the Neo Liberal philosophy needs putting back in its cage. Alot of people who voted Green while holding there nose, will soon become true Green voters. I have always been a Labor voter but if they want to follow the Neo Lib path, they will lose my vote. And I will go Green as they seem if somewhat idealistic, they could show the way out of this Neo Lib mess.
The problem with leaving consideration of the tax cuts to the future is that Albanese and Chalmers keep saying they are going to happen. The current chant of “It’s going ahead” will only give rise to justifiable claims of hypocrisy if the cuts are cancelled later. Because we can see ‘now’ how bad things are and they’re unlikely to be significantly better before the next election.
On the other hand, the legislation would pass now and everyone would have got used to the idea. Labor has done a lot already, not all of it good, unfortunately, but on balance they’ll have a good enough record to boast about. If people chant “Broken promises”, Labor can always chant Tony Abbott back to the Libs.
And this whole exercise should teach politicians to be a whole lot more careful with the pre-election promises that they make. It should certainly be decades at least before a Liberal government should be believed when they tell us how good the economy and the books are!
Truly, lord, “Labor must demonstrate that it’s indeed a party of left-forward thinkers and willingly display its ideology to one and all.” Labor and albo have ALREADY done well as a party of thinkers and deserve our thanks. The whingers are no better than the murdoch media and the inept morning show boys and girls. with the people blinded by the bandit the saddest. Be thankful and support labor’s need to set priorities and their absolute need to avoid the puerile traps, like tax cuts, set by the media and opposition parties. ie after 9 shithouse years we need to avoid the bullshit, be positive, shut up and listen.
the sad thing is, Labor dont have to die on the hill on this issue. Just kill the cuts and show some balls. By staying the coarse , all they do is demonstrate that they are LNP lite.
I am over this bullshit 101 economics about supply and demand and inflation lies. If you want to rule by this ideology, your going to fuck up. Using interest rates to control inflation is a bit of a crock. Lots of rises are on things that are not affected by interest rates. health insurance is a good example. The cost of petrol, the cost of car insurance, the cost of beer and the cost of tobacco. Yet we get slugged for these sins too. You have high inflation, ie people pay more for shit so lets raise interest rates so people pay even more for shit. Seems more ideology than policy based on facts.
so many have such a short memory. These stage 3 tax cuts were a “wedge” against Labor, noting how the initial stages were tied to the 3rd stage. Be patient. Albo won”t allow them to happen, but he will “reverse wedge” the LNP on them when they are rescinded. This story has a lot of time yet to play itself out. grab your popcorn.
I thought that “conventional “ economics says that taxes pay for services. Unconventional economics, for example MMT, says that taxation controls inflation.
The proposed cut means that inflation will increase and services reduced.- a lose/lose outcome but promises are promises, eh?
Why not bring it on; it will pass through the Reps but be blocked by those bastards, the Greens & Teals, both of whom will thus bring odium on themselves but the few people earning less than $200,000 will thank them.
Geoff Andrews, ideology seems to prevail when common sense would say there is a disconnect between cause and effect.
I dont believe the tax cuts as proposed will affect inflation at all. Where is the empirical evidence? Non facts directing decisions, just bubble talk. Lets discuss making the RIGHT decisions for the RIGHT reason, anything else is BS talk.
Thats not to say they are a good idea. In this case opportunity costs of relieving poverty for a large number of people would be more than a good outcome.
Pulling people out of poverty costs money so all i see is zero sum game computing in a bubble. Pooling all the resourses we use now, including super, could easily fund a UBI. Think of the efficiency of scale ie. wasted PS and private ticket clipping we now employ.
But you know, economics as i see it is all bubble wishful thinking. All based on human behaviours who then dont act as assumed.
Classically, if you want people in old age to not starve, pay them a decend pension. Why would you create another industry that sucks your finances dry……super. IDEOLOGY. Decisions based on facts just doesnt register with economics gurus.