Our progressive tax system isn't working. Miners, bankers and polluters must pay their share
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Version 0 of 1. “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”. This was the insight of Jean-Baptiste Colbert, the finance minister for the French King Louis XIV and it has continued to be good political advice for policymakers down through the ages. The practical problem with this advice is that the “most feathered” in our society are usually also the most powerful. Not only do they often have the means to make sure their view is publicly heard, but they often possess a direct line of communication to the powerful elite, regardless of whether they are Liberal or Labor. For instance, the Minerals Council set in train the demise of a first-term prime minister in Kevin Rudd. A few years later, the Business Council captured the incoming Abbott government. Their first budget was produced in a bubble of privilege and influence. When its cruel disregard for everyday Australians was dropped on us, while it was business as usual for the usuals in business, the public was rightly outraged. So the question is: will reform of the taxation system see a change to business as usual in Australia? The whole point of tax is to raise the revenue we need to pay for the Australian society we want: the Greens’ vision for this society is one that values equality, is caring, innovative, healthy, and protected from the impacts of global warming. If we are serious about removing the inequity within the taxation system – turning it from a system that looks after the big end of town into one that relies most on those who can most afford to pay – then we need to make sure that the government of the day is actually willing to make the hard decisions, and stand up to vested interests. And therein lies the potency of Jean-Baptiste Colbert’s advice. The wealthiest in our society are very few in number. While their hissing appears louder throughout the 24-hour news cycle, it is in fact tiny when compared to the united voices of the voting public. People need to know where we are going as a nation, how much it will cost to get there, and how we are going to raise the money to do it. The Greens want to make sure that in securing the revenue, the big end of town pays its way, that tax evasion is leapt on, and that there are not two sets of laws in this country – one for the wealthy and one for everybody else – which is currently the case. I initiated the Senate inquiry that’s starting today to look at the adequacy, compliance and enforcement of Australia’s current laws, any need for greater transparency, and the broader economic impacts of corporate tax avoidance. The big miners, tech companies and accounting firms will all be at the public hearings to provide evidence: Google, Apple, Glencore, BHP, KPMG and more. While News Corp is represented, it’s very disappointing that Rupert Murdoch did not make himself available to appear. Nor did Adani or the Future Fund. They are significant players that have serious questions to answer about the tax they pay in Australia. It is in the public interest that they front up. It is unacceptable that in the 21st century, the gap between the rich and the poor is increasing, not decreasing. Surely it is an indication that the very nature of our progressive taxation system is not working. The release of the tax discussion paper, while neutral in its language, does open up important areas to explore. Many of these include revenue-raising ideas that the Greens have long advocated. Yet, like the Henry Tax review before it, unless there is the political will to embark upon real reform with meaningful change, we run the risk of further entrenching the gap between the rich and the poor. We want the big miners, bankers and polluters to pay their fair share first. We have a fully costed platform, which raises almost $80bn over the forward estimates, and proves that if the government was serious about an equitable society and transforming to an innovative economy based on clean energy, services and knowledge, reining in spending, and raising revenue from those who can afford to pay, they could look at a number of measures. The introduction of a progressive superannuation contributions tax to replace the 15% flat rate could raise $10.16bn. Taxing super contributions on a progressive scale would end the use of superannuation as a tax haven for the wealthy, while helping people on lower incomes to save more for their retirements. The Greens’ proposal would see the current flat superannuation tax rate of 15% replaced with a progressive system closely based on a person’s marginal income tax rate. Applying a “public insurance” levy on the big four banks that are too big to fail would raise $16.8bn. The “big four” banks currently get massive implicit subsidies from the public and government because they are “too big to fail”. By applying the levy to just the “big four” banks and not the other smaller institutions, the “big four” would not be in a position to pass on the costs on, because consumers would be able to move to other institutions not subject to the levy. Abolishing tax breaks for the fossil fuel industry (except those used for agricultural purposes) would raise $10.05bn. The G20, IMF, OECD and World Bank have all urged governments to stop providing subsidies for fossil fuel use. By taking away miners’ tax-free fuel, the government could uphold Australia’s international commitment and also raise $10bn over the next four years alone. To put it simply, the Greens want genuine restructuring of the Australian economy to make our society more equitable, more innovative and resilient as the world moves to address global warming and global inequality. It’s time to make sure that as a nation we’ve got the money we need for health, for education and to look after our environment, rather than see multinational corporations organise themselves to rip off Australia. The big end of town must pay its fair share so that we can embrace the future and continue to improve the vital public services that Australians cherish. Unlike the major parties, the Australian Greens are not afraid to stand up to the big mining corporations, fossil fuel vested interests and the big banks to care for people and protect the environment. |