The Australian Council of Social Service says it is concerned that today’s announcement on tax bills runs the risk of undermining the Government’s stated goal of bringing integrity to the Federal Budget.
“The Government has sent a concerning signal today that low income households could bear the brunt of fiscal restraint by retaining tax breaks that mainly benefit high income earners, such as the tax exemption for certain superannuation fund earnings and the cap on self-education expenses claims, while cutting programs which support low income households,” said Dr Cassandra Goldie, ACOSS CEO.
“In recent weeks, the Government has confirmed its decision to cut the rebate for super contributions for low income earners, the allowance supplement ($4 a week for allowance recipients), and the School Kids Bonus – which ACOSS argues should be re-directed into higher Family Tax Benefits for low income families, not abolished altogether.
‘The allowance supplement is the only real increase in Newstart Allowance for almost 20 years. ACOSS has called for a $50 increase to ease entrenched poverty among unemployed people and single parents, many of whom were affected by recent payment cuts. Against that backdrop, to take away a $4 increase is unconscionable.
“The removal of the super contributions rebate penalises compulsory superannuation contributions, increasing the tax rate for low income earners below $37,000 by 15 cents in every dollar contributed.
“This stands in contrast to the decision not to proceed with the $100,000 cap on tax exemptions on superannuation earnings supporting pensions and annuities which benefits the ‘top end’.
“This measure would only have affected those with super assets worth more than $2 million, and would have delivered $350 million in savings over the next 4 years. While it was only a drop in the ocean in the context of Government superannuation tax concessions expected to be worth $44.8 billion by 2014-15, it was a step towards a fairer system.
“ACOSS is also concerned the measures to address profit-shifting and tax minimisation by companies investing overseas may be watered down. The ATO has indicated that these avoidance strategies pose a major threat to public revenue so firm action is needed.
“The Commission of Audit should comprehensively review Government spending and tax expenditures to help set the Budget on a path to sustainability. Much of the waste in the budget is on tax side and this disproportionately benefits high earners.>
“Equally, the Government should not be ruling out or repealing tax measures without a considered tax reform process, such as was conducted through the Henry Tax Review. As the Assistant Treasurer noted upon taking up his Senate position, this Review is unfinished business. We have strongly backed the Prime Minister’s pre-election commitment to pursue tax reform through an open process, including a White Paper. Yet, today we have a surprise announcement by the Government about tax measures upon which only two weeks of consultation will occur, and only with industry.
“The community sector has an important and useful role to play in discussions about the future of government revenue and expenditure, including through the Commission of Audit, and we urge the Treasurer and Assistant Treasurer to engage directly with the sector going forward in these processes.
“With Australia to assume the Presidency of the G20 in December, the world will be looking to this Government to set an agenda for inclusive growth in which the benefits of growth are shared with a view to creating stronger economies and communities,” Dr Goldie said.
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