BY KAREN FLETCHER
On October 19, the ALP announced that, if elected, it will leave the Goods and Services Tax almost entirely intact — just another reminder that the Labor Party is interested only in the needs of the corporate rich, not the rest of us.
"Opposition" leader Kim Beazley and shadow treasurer Simon Crean outlined just five "essential goods and services" that the tax will be removed from: domestic electricity and gas bills, nappies, funerals, caravan and boarding house rents and women's sanitary products. In addition, they announced that an ALP government would expand the textbook subsidy to cover the full cost of the GST.
These promises fall woefully short of the bare minimum needed to remove the tax from "essential" items. For most people, transport, shelter and basic household items will remain substantially more expensive.
But even removing the tax on essentials is not enough — we must abolish it completely.
The GST has hit the majority of Australians — living on less than $35,000 a year — hard. The first indication of this was the significant slump in consumer spending in the first six months of the GST. Beazley and Crean make much of the effect of this on the economy, but remain silent on the real problem: that most Australians are struggling to make ends meet.
Worst off are welfare recipients, pensioners and the underemployed. Prime Minister John Howard's promised 4% compensation would have barely covered the increased cost of living. According to figures released by the Australian Consumer and Competition Commission last month, fresh and processed food (not directly taxed) has risen by more than 10% since the GST was introduced. Public transport costs have risen by 10% and car maintenance costs by more than 5%.
But even the promised compensation turned out to be a lie, as it was proved that the "4%" included already scheduled increases. The real "compensation" boiled down to just 2%.
Howard and federal treasurer Peter Costello also said that personal income taxes would offset the costs of the GST. In the first year of the GST, personal income taxes were reduced by less than a quarter of the amount that the GST raised.
The other lie of the Howard government was that the GST would reduce tax fraud. In August, Liberal Party branches in Queensland were caught claiming tax input credits for events which were GST free. Even more common are anecdotal reports of business owners purchasing personal items through the company, and claiming back the GST spent.
Consumption taxes are inherently unfair. Far from ensuring that the rich pay their way, they are felt most acutely by those who spend most of their income on basic goods and services — poor workers, pensioners and the unemployed.
While the GST is in place we will continue to see a rapid shift of wealth from rich to poor. That is why the Socialist Alliance is vowing to abolish the whole thing.
The ALP argues that there simply isn't enough money to abolish the tax. However, it would be relatively simple to raise the same amount of revenue that is currently coming in from the GST.
In the first 12 months of the GST, $24.18 billion of GST was collected. In the same year, the company tax rate was lowered to 30 cents in the dollar, the lowest rate in decades. Company tax now accounts for just 19% of tax revenue. If this was lifted back to 49 cents in the dollar, we could raise another $13 billion. Lifting it to 60 cents in the dollar would raise $25 billion, the entire amount of the GST.
Further, the budget has at least $25 billion of open and hidden hand-outs to business in it. These should be abolished. Introducing a tax on family trusts, used by farmers and business owners to avoid paying tax, would gain another $1 billion. At the moment, the top marginal tax rate, 47%, starts at $60,000. Significantly raising taxes on those who earn more than $200,000 a year could net as much as $10 billion.
These taxes could easily compensate for the GST, and also provide enough funds to restore decent standards to public health, education and nursing homes. They are solutions, however, that the ALP will not even consider because it would annoy its financial backers.
So the ALP has attempted to convince us that it would really like to get rid of the GST, while putting forward such minor changes that the business elite will not suffer.
In parliament, the Socialist Alliance would support the ALP's changes, believing that any reduction in this unfair tax is better than none.
We reject the Greens' argument that taxing low-income people on their gas and electricity bills is necessary in order to curb use of environmentally damaging products. Working people, pensioners students and the unemployed need to be able to heat and cool their homes, and live in relative comfort. The GST has an infinitesimal effect on energy consumption.
But even if the ALP has the numbers to introduce these changes, we will continue to organise, on the streets, in the unions, to fight this unfair tax until it is abolished. Because we are in favour of the millions, not the millionaires.
[Karen Fletcher is a Queensland Senate candidate for the Socialist Alliance.]