Report shows the scale of government handouts to the rich

Contributed by Joe Montero

A report commissioned by Anglicare from Per Capita brings out some of the details to what most people already know, that is, that the richest part of Australian society receives much more government support than the poorest.

When the study, using Treasury data, ABS figures and the University of Melbourne’s HILDA survey, shows that major tax concessions to the top end cost taxpayers $135 billion a year, it comes as no surprise to anyone. It amounts to far more than the combined cost of Newstart, the age pension, family assistance payments and disability payments.

And governments have continually insisted that welfare payments are a burden on society and remained tight lipped on handouts to the best off.

It is even more telling when more than half of these handouts go to the richest fifth of Australian society. They get $68.5 billion a year.  Every person on a wage has to pay $37 a week to fund this.

This generosity comes through tax concessions. Compare this to the bottom 20 percent who get $6 billion.

The report however, only looks at benefits paid out in terms of households. While it does factor in, the ability of wealthier households engaged in business to use discounts existing in the taxation system to offset expenditures, by claiming them as household expenditures, it does not consider benefits going to corporations. If this is included, the benefit going to the top would show to be much bigger.

For example, Foxtel pocketed a $30 million handout last year and avoided paying $8.3 billion in tax for three years.  This is only one case. According to the Tax Office, 354 companies operating in Australia avoided paying income on $911 billion, and last year, said said that 36 percent of  companies pay no tax. This is not the complete picture either. WikiLeaks’ “Paradise Papers” disclosures, gave a good idea of the scale of the tax avoidance industry through transferring funds to tax free havens, and this includes Australia.

In the 2015-16 financial year, 17 of the 50 biggest Australian companies paid no company tax. Many of the others paid little. The total amount paid was $20 billion, on a total gross company profit of $130 billion, most of which, was accounted for by these companies.

In the context of the Per Capita report, it reveals that the richer you are, the more you get in superannuation concessions, and the greater your capacity to take advantage of income splitting, capital gains tax and negative gearing.

It proves beyond doubt, that the tax system is deliberately designed to shift income upwards. This being the case, closing off specific loopholes to change the situation is not enough in itself. making a difference requires bringing in a new tax system, aimed at a very different purpose.

The reason being, close off one loophole and there will be a shift to another. For instance, put an end to negative gearing, and there can be a shift to an increased use of tax-free trusts.

In addition to putting in place a new taxation system, government economic and social policy overall, must radically change, and set in place very different priorities.

A good example is, if there is an intention to put an end to negative gearing and limit the capital gains tax concession, there must be enough revenue available, to fund large scale government housing provision. At least enough to offset the fall in private investment in the housing provision market.

If we are going to have a fairer Australia, where the fruits of our effort are shared, the disproportionate handouts to the richest must come to an end.

 

 

 

 

 

 

 

5 Comments on "Report shows the scale of government handouts to the rich"

  1. Important study but spoilt by mindless repetition of the myth that we need the lost revenue to pay for desirable government programs. In an economy operating at only 80% of capacity and with 20% un- and underemployment, there is no reason to wait for tax reform before we boost social programs.

  2. I just wish to point out that you spelt “filth” incorrectly…

    “It is even more telling when more than half of these handouts go to the richest fifth of Australian society”

  3. Gregory Stokoe | 20 November 2019 at 7:05 am | Reply

    https://www.abc.net.au/news/2018-02-14/why-many-big-companies-dont-pay-corporate-tax/9443840 Many of them are foreign companies which increase their profits annually, which increases the“cost of living”. That why people are NOT SPENDING, but are paying off their credit cards 💳🤔

  4. A simple change to a 4% Expenditure Tax would generate (on 2012-2013 rates) an approximate $1.5 Trillion tax income for the government of the day to use on whatever they deem necessary.
    This figure is more than enough to fully fund Healthcare, Education, Aged Care, and Childcare – plus a lot more – and all in the first year and i my o the future.
    All other taxation could be removed entirely ensuring that user pays … if you spend – you pay.
    Safety nets for pensioners and low income earners are pre-paid the 4% once a year based on an assumed minimum income rate of $50k p/a.

  5. Do we have any information on when the report was issued or where it can be found

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