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Tag Archives: superannuation guarantee increase

Axing the taxes equates to self harm

I am trying to understand why we are repealing the carbon and mining taxes.

“The carbon tax is a $7.6 billion dollar hit on the economy. As you (the Minerals Council of Australia) noted in your submission to the Emissions Reduction Fund Green Paper, the burden on the minerals sector alone is estimated to be $2.6 billion by 30 June 2014.

There is no reason for the repeal to be delayed – the carbon tax is hurting Australian families and businesses and from 1 July is estimated to cost them $21 million per day.”

This is the spin from Greg Hunt. They just love to say this is costing “a big scary number”. When he says the carbon tax is a hit on the economy, he means it is a hit on polluters. They are the ones who pay the carbon tax. The fact that they passed on any imposte to the consumer is a failing in the legislation if you ask me.

And excuse me if I don’t think $2.6 billion very relevant in comparison to the superprofits that mining companies are making digging up OUR resources.

Why we are protecting profitable mining companies at the expense of families and small business is beyond me and seems contrary to the Coalition rhetoric.

The tax free threshold was set to increase to $19,400. For low income earners, that would save $228 per year and it would mean those who earn between $18,200 and $19,400 would no longer have to fill in a tax return. The repeal of the carbon tax will scrap this.

Low income earners will also lose the low income superannuation contribution scheme, which pays $500 to low-income individuals to boost inadequate retirement savings.

A family with three children, one at primary school and two in high school, and where both adults earn just above the minimum wage of $37,000, would lose $2050 from the abolition of the Schoolkids Bonus, according to the Australian Institute.

It is questionable as to whether this was even attached to the mining tax as it was actually introduced to replace a previous payment that was being underutilised – the Education Tax Refund.

The government will also delay (scrap?) the move of the Superannuation Guarantee to 12%. This will affect the retirement savings of all employees which, with the proposed increase in the retirement age to 70, and the lowering of indexation to pensions, seems a counterproductive move.

They are also scrapping the Income Support Bonus, which includes payments to the children of veterans and is a lump-sum supplementary payment made twice a year to people on certain income support payments.

They are hurting small business by unwinding the instant asset write-off. This policy allowed small businesses to write off depreciating assets costing less than $6,500, and the first $5,000 was offset against the mining tax.

They are also discontinuing the company loss carry-back, a benefit for small businesses, and dismantling the accelerated depreciation for motor vehicles.

And of course, we have to attack renewable energy. Existing income tax law provides an immediate tax deduction for expenditure incurred when exploring or prospecting for minerals, petroleum or quarry minerals. In 2012 this was extended to geothermal exploration. They are cutting the deduction for geothermal but not for the hydrocarbons.

Add to all these cutbacks the cost of Direct Action should it pass the Senate. I was going to work out the individual cost but Hockey’s budget says one thing in the text and another in the figures as pointed out in Business Spectator.

“The budget text states that the government will provide an “initial” $2.55 billion to establish the Emissions Reduction Fund, which is consistent with what the Coalition had promised prior to the election over the first four years of the scheme.

Yet the table which accompanies this text listing the hard dollars provides a contradictory and highly confusing story. It outlines a total funding allocation over the next four years of just under $1.15 billion.”

So who can tell? I think we all are coming to realise this will never happen at any meaningful level.

As for the mining tax, that is also very confusing with the Coalition arguing so many different views depending on what we are talking about.

They say the mining tax has hurt investment while boasting “As Minister for the Environment, I have approved more than $500 billion worth of new projects in the mining and resources sector.”

They say the mining tax has cost jobs but everyone agrees that we are moving from an investment phase to a less labour-intensive production phase. This shift is causing a loss of jobs but it would see an increase in revenue.

So what do we do? Accept the inevitable job losses and forego between $3.4 billion (budget) and $4.4 billion (PEFO) projected revenue over the forward estimates. We also increase the 457 visa intake and decrease the oversight of it so mining companies can have a fluid malleable workforce.

I cannot understand why anyone other than high polluting miners and their high falutin’ sidekicks would think that axing these two taxes is in anyway good for the country.