ACOSS launches tax policy to underpin strong future for services and income support

The Australian Council of Social Service today launched its tax reform election policy, calling for serious tax reform, starting with an end to tax loopholes for the wealthy in order to fund investment in our essential services and income support system.

ACOSS CEO Cassandra Goldie launched the policy at the ACOSS Budget Breakfast following addresses by Human Services Minister Paul Fletcher and Shadow Treasurer Chris Bowen.

“People often ask why they are paying more for the doctor, aged care, child care and other essential services. One of the main reasons is that we don’t have the revenue base we need to meet the costs of services in an ageing population. We are the 8th lowest taxed country in the OECD.”

“Health, aged care and disability services alone are expected to cost $21 billion higher per year in a decade’s time. These investments are necessary and overdue, and their costs must be met a stronger tax base.”

“This is not the time for a tax cut ‘auction’. In the recent past, we have seen how eight successive income tax cuts created pressure for harsh cutbacks in essential services and social security payments in the 2014 budget.”

“The huge tax cuts proposed by the Coalition in 2022 and 2024 which mainly go to people earning over $90,000 a year would cost $40 billion per year. These cuts would deliver a saving of $224 a week to people earning $200,000 a year or more. These unnecessary and unaffordable tax cuts should be withdrawn.”

“At the same time, major gaps in the income tax system enable people with high incomes to avoid contributing their fair share remain in place, including:

  • The use of private trusts and companies to avoid tax;
  • Negative gearing and the 50% Capital Gains Tax ‘discount’;
  • Avoidance of tax by companies operating across national borders;
  • The tax free status of investments through superannuation after retirement.

“Over-generous tax breaks for superannuation after retirement, dividend imputation ‘refunds’, and weaknesses in the Medicare Levy must be reformed so that people can access health and aged care services when they need them.”

The ALP plan to deliver major reform to negative gearing, capital gains, dividend imputation and private trusts is welcome. The Coalition has delivered significant reforms to superannuation, but much more remains to be done.

At ACOSS’ Budget Breakfast event today, attended by representatives of the community sector and grassroots groups campaigning to raise Newstart, the Shadow Treasurer said that increasing Newstart required a review because it was complex. ACOSS CEO Cassandra Goldie responded:

“We don’t need a review to know that Newstart needs to be increased. We’ve seen both the major parties commit to complex, expensive tax cuts without any need for a review. The social, economic and moral case is compelling.”

“Last week Mr Shorten became the first leader of a major party in 25 years to say that Newstart has to increase. We now need him to commit to doing so as an urgent priority of the Shorten Government.”

‘By contrast, despite all the evidence, the Social Services Minister Paul Fletcher today affirmed his belief that the current Newstart level was ‘appropriate’.

“The assertion last Friday from the Prime Minister that we have one of the best safety nets in the world is wrong. We have the lowest unemployment payment in the OECD. And the answer that people on Newstart receive other payments is a distraction. The only payment all people on Newstart receive is the Energy Supplement which is just $4.40 a week. The minority who receive Rent Assistance (maximum of $67.50 per week) or Family Payments are actually financially worse off because either they are renting in the expensive private market, or face the large costs of kids, and many are still left below the poverty line”, said Dr Goldie said.

ACOSS tax reform policy.