Tax discrimination
Tax "reform", in particular the GST, is looming as a key issue in the next federal election.
Labor PM Paul Keating, Liberal leader John Hewson and now John Howard have all attempted to sell us the idea that a broad-based consumption tax is a less complicated but no less equitable system of taxing goods and services. Fortunately, the majority of Australians have, to date, recognised that this is a lie.
For women, especially, a GST would be a disaster.
In a paper prepared last year for the Australia Institute, economist Julie Smith evaluated the impact of the New Zealand GST on women, five years after its introduction. The NZ model, which includes some compensation for low-income earners and families with children, and some exemptions, is similar to that being proposed by Howard.
Smith found that the major losers under a GST are those on low incomes and sole parents.
Because low-income earners, the majority of whom are women in Australia, spend a greater proportion of their income on basic consumer items (food, clothing, housing, transport) than high-income earners, they pay proportionately higher tax under a GST.
Many of the living expenses that must be covered by sole parents are the same, or nearly the same, as those borne by two-income families (telephone rental, electricity, set school expenses, child-care). Increased prices for these services will hit sole parents — more than 80% of whom are women and 84% of whom are already officially poor (earning less than $249 per week) — exceedingly hard.
For the 19% of women who survive on the government's meagre social security payments, and for those who depend on the universal family payment to cover those "little extra" child-rearing costs, GST-related price increases and inflation will disproportionately erode their purchasing power.
The imposition of a GST on child-care services (no Coalition MP has suggested these be exempt) would significantly raise the already rising barriers to mothers' full and equal participation in the paid work force as centres increase their fees yet again.
At the other end of the life cycle, increased nursing home and medical charges will cause enormous suffering for the elderly, the majority of whom are women.
The introduction of the GST in NZ was accompanied by income tax cuts — much like the Australian government is proposing. According to Smith, this sugar-coating for the GST in fact meant a double whammy for women.
Not surprisingly, Smith found that the income tax cuts overwhelmingly benefited the primary earners in households, more often men. This additional penalty on women would be exacerbated by the disparity in women's and men's average incomes. Even where women are the primary earners in households, their lower average income means lower average benefit from income tax cuts.
As for all those Australian women whose annual income is below the income tax threshold, they will pay more for almost everything they buy but will gain absolutely nothing from the tax cuts.
As if these immediate effects are not discriminatory enough, Smith found that, over the longer term, the NZ government paid for the income tax cuts with further budget cutbacks in family assistance and social security benefits, most of which are paid to women.
The GST, by discriminating against the poor, discriminates directly against women.
By Lisa Macdonald