Contributed by Adam Carlton
Thanks mainly to the about face by formally Xenophon Senators, now known as the Centre Alliance, the government’s intended $143 billion tax cut is set to get through.
The whole thing is a major con, designed to create the illusion that the government was handing out money to the average Australian, but really using this as a smokescreen to take much more.
By having initially joined the opposition to these cuts, the Centre Alliance showed that it knows this. The said so. Especially when they are given to the those enjoying being in the top 20 percent of incomes. This is why they objected to the Third Stage, which hands them a windfall. But after backroom talks they come out agreeing to stifle debate and not pursue their own objections. This sets up the Alliance to being accused of being corrupted.
Pauline Hanson has achieved an even more spectacular back flip, from vocal opposition to an enthusiastic supporter.
Turnbull and his ministers have rehashed the old trickle down argument, by arguing that this will lead to a rise in income for all.
Unions disagree. They are saying that the evidence of advanced economies over 10 years, shows tax cuts have not generally led to growth in wages. A paper released by the Australian Council of Trade Unions (ACTU), reveals that OECD data spanning 2003 to 2016, reveals a disconnection at best and an opposite relationship at worst, between tax cuts and wages growth.
Research by the Australia Institute shows that the top 20 percent of incomes will get 95 percent of the benefit in money terms. In addition, almost wiping out what is left of the progressive nature of the Australian income tax system, will send even more of the benefit upwards. A progressive tax system, is one where those on higher incomes pay a higher proportion, and through this, a portion of national income is redistributed downwards.
Greater inequality is inevitable. Not only because the less well off have a smaller share, but also, because falling tax revenues must translate into further cuts in government services that benefit the less well off.
Worse still, is that getting the package through, will set the stage to cut company tax and Turnbull has promised to bring this in at the earliest opportunity.
Saving the corporate world from having to pay is not the primary objective. This government knows that those with the biggest obligations under the current rate pay very little in reality, if they pay anything at all. Lowering the company tax rate will not change this and will not lead to less being paid.
What it is intended to do, is to cement in the ideology that the principal role of government is to provide the best environment for big business to operate profitably, and to sell this as the only legitimate road to economic recovery.
Cutting company tax will be used to fan a headwind, through which other changes can be brought through. A new wave of government cuts and privatisations will be on top of the list. We will be told that the government must cut expenses. This is an effort to resurrect the corpse of neoliberalism.
Neoliberalism has become so unpopular, because it is seen as part of the problem. it has been a contributor to bringing the mess wee are in and imposing the burden of the less fortunate. More of the same is going to create an even bigger mess and impose an even greater burden.
The only good positive note, is that this is going to be a good teacher by negative example.
Business that gets help except through the front door is the business that will eventually go broke. Handouts by government are the best way to encourage the shonks!
You can’t have low taxes and properly-funded government services at the same time. Every dollar in tax cuts that goes to the top end is dollar that is mot available for social services, healthcare, education and public housing. These sectors have been financially cut to the bone for far too long. If you want to see the real effects of trickle-down economics, just have a look at the outcomes for students, the poor, the homeless and the sick in the United States. Furthermore inequality is a major driver of crime, mental illness and a gross waste of human potential. Trickle-down economics is a fallacy foisted on us by the rich and powerful for their own benefit and is entirely contrary to the fundamental principle of diminishing returns on capital.