Union plan calls for fairness to be at the heart of tax policy

The ACTU Executive yesterday endorsed an agenda of tax reform priorities designed to tackle growing inequality and unfairness in our economic system and help create better, higher-paying jobs.

The plan, Tax reform for a fairer society and strong economy, calls for action in five key areas of tax reform:

1. reducing the generosity of tax concessions;
2. repairing the company tax base;
3. addressing personal tax rates;
4. addressing vertical fiscal imbalance; and
5. increasing Australian Taxation Office resources for investigations.

The union plan would also reinvest billions of dollars of mis-targeted spending. Excessive deductions and loopholes would be closed and funds raised would be focused on key economic and social measures such as rising health costs, the Gonski school funding reforms and building desperately needed national infrastructure.

At the ACTU Executive meeting, unions urged the Federal Government to not be driven by reckless, short term cuts, but to seize the opportunities ahead by investing in a better future based on shared prosperity for all Australians.

Key priorities identified by unions include:

1. Reducing the generosity of tax concessions and deductions.
   • Applying a Fair Tax Contribution (also known as a Buffett Tax) to ensure high-wealth individuals contribute a minimum amount of income tax.
   • Limiting negative gearing concessions to new properties only and halving the 50% CGT discount on specified investment classes.
   • Reforming the tax treatment of superannuation where current tax concessions are skewed to those at the top end of the income range.
2. Repairing the company tax base.
   • Better targeting Research and Development (R&D) tax concessions to achieve investment in jobs of the future.
   • Increasing transparency through tax reporting of all companies with annual turnover of more than $100m.
3. Addressing personal tax rate inequities.
   • Prioritising any changes to reduce high effective marginal tax rates for low-income casual, part-time and insecure workers.
4. Addressing vertical fiscal imbalance.
   • Reducing the complexity and increasing the efficiency of federal and state taxes.
   • Restoring Federal Government funding for state delivered services such as health and education.
5. Increasing Australian Taxation Office resources
   • Ensure the ATO is properly resourced to effectively investigate and pursue tax avoidance and multi-national profit shifting.

Quotes attributable to ACTU President Ged Kearney:

“Our current tax system is simply not fair and needs to be fixed. There are too many breaks for wealthy individuals and too many loopholes for corporations to get out of paying their share.”

“The last thing Australians want to see is cuts to Medicare, education and other services, so it’s important to ensure we don’t continue to divert spending into unsustainable, ineffective or unfair tax breaks.”

“Unions are standing up for ordinary working Australians to make sure their interests are protected from further big-business cash grabs and government cost-cutting.”

“We can have a tax system that delivers sustainable jobs and opportunity for all, but only if it’s built on a foundation of fairness.”

“By adopting today’s plan, Unions are delivering a simple message that is often sadly ignored: everyone needs to pay their fair share of tax.”

Media contact: Ben Jessup 0410 632 123 or Jessica Kendall 0414 679 867

Additional information:

• Australian Taxation Office statistics reveal that in 2012/13, 55 high-wealth individuals earning more than $1 million paid their tax advisers $42.5 million to entirely eliminate their tax liabilities using negative gearing, capital gains tax concessions, superannuation concessions and discretionary trusts.
• Of the $3.7 billion annual value of negative gearing concessions, 50% goes to the top 20% of households while the bottom half only get 20%. Lack of affordable housing is a critical issue, particularly for new homebuyers struggling to enter the market.
• Of the $4 billion annual cost of CGT concessions, more than 80% goes to the top 20% of households while just 7% goes to the bottom half.
• Almost 60% of Superannuation tax concessions accrue to the top 20% of income earners and the bottom 10% are actually worse off as there super contributions are taxed at a higher rate than their income. Generous concessions at the top do not reduce revenue expenditure on the age pension and leave out those that need support the most.
• One in five Australian-owned private companies with more than $100 million in revenue paid no tax last financial year. Of the top 200 ASX-listed companies, 57% used subsidiaries in tax havens to avoid paying tax in Australia and almost one-third had an average effective tax rate of 10% or less.