ACOSS warns against government’s ‘unprecedented’ tax cuts

The Morrison government’s plan to give people on $200,000 a tax cut of $11,000 a year will guarantee funding cuts to essential services and hurt society’s most vulnerable, the Australian Council of Social Service says.   

ACOSS CEO Cassandra Goldie said if the final stage of the government’s tax package was passed, people on low and middle incomes would pay the price in the form of funding cuts to health, education and community services.

She said it was not responsible budgeting to lock in big tax cuts for 2024-25 when it was impossible to know what the state of the budget or economy will be then.

“The very real risk here is that the unprecedented scale of these tax cuts will guarantee funding cuts to essential services we all rely on. We already have the seventh lowest tax base in the OECD,” Goldie said.

“The government is banking on the lowest growth in funding for services in 50 years and growth in GDP and wages of more than 3 per cent to pay for the tax cuts. That’s just not the real world and is unlikely to happen.”

We know from bitter experience #auspol that these cuts will fall hardest & deepest on people who are least powerful including: elderly & young people, single parents, people unemployed, First Nations people, people with disability. #SplitTheBill @ACOSS @TasCOSS @WACOSS @QCOSS_ https://t.co/DMzBybhmps

— SACOSS (@SACOSS) June 24, 2019

The government’s tax cut package is split into three phases over 10 years, with the third stage from 2024 creating a flat tax rate of 30 per cent for those earning between $40,000 and $200,000.

Labor has indicated support for the first two stages of the plan – which target low and middle-income workers – but is opposed to stage three, which would give those on $200,000 a tax cut of $11,000 a year.

Goldie welcomed Labor’s opposition to stage three of the plan, arguing these cuts threatened to destroy Australia’s ability to effectively tackle community challenges.

“People earning $200,000 are among the highest 5 per cent of income earners – they are high-income earners, especially when compared to people on the median wage of $55,000 a year, and people on Newstart, which is equivalent to about $15,000 a year,” she said.

“Are we really going to give people on $200,000 a tax cut of $11,000 per year before we increase Newstart?

“We urge the Parliament to demand the government split the bill so each stage can be considered on its merits. This is the only responsible course for the country.”

Opposition leader Anthony Albanese on Monday urged the government to bring forward stage two of its tax package but said the final stage was reckless.

“We think that stage three at a cost of some $95 billion down the track for an economy which is very soft at the moment, which no one can say what [it will look] like in 2024-25, is really a triumph of hope over economic reality,” Albanese told reporters.

But Finance Minister Mathias Cormann said on Twitter the government would only pass the package in its entirety.

We will not split our plan to deliver income tax relief to all working Australians.

Labor have still not learnt the lessons from the election.

— Mathias Cormann (@MathiasCormann) June 24, 2019

“We will not split our plan to deliver income tax relief to all working Australians,” Cormann said.

“Our plan prioritises low and middle income earners, takes the bracket creep monkey off people’s back, is economically necessary and fiscally responsible and, importantly, it is what Australians voted for.”