Taxation

FAIRER TAXATION FOR ALL OF US

It is reasonable to say that Australia’s Federal taxation system has been not been worker friendly for a very long time. The influence of neoliberal trickle down economics over the past few decades has resulted in a taxation system that favours the well off at the direct expense of ordinary working people who carry the tax burden, while large multinational companies and high income earners (and religious organisations) avoid taxation.

It needs to be understood that taxation is used to control inflation and should only be applied to disposable income or profits. Businesses are taxed only on the amount earned after expenses. Their operational expenses, such as electricity, rent, interest payments, transport etc, reduce their taxation liability. High-income earners have a variety of investment options to minimise their tax obligations – investment properties, the stock market, trust funds, superannuation schemes etc. Tax minimisation strategies are disproportionately available for the well off, while ordinary workers can claim very little, and are taxed largely on their gross earnings. Workers currently carry the taxation burden and are often under financial pressure, which is accentuated with current flat wage growth. Tax relief for workers will create disposable income and improve quality of life. Typically workers spend locally which stimulates the economy. This creates sustainable growth from street level and flows upwards. It is the opposite to, and far more effective than failed trickle down economics.
Australian Working Families recognises the mechanisms that cause inequality and have developed a taxation platform that is clearly aimed at creating jobs, helping workers to their fair share and building a stronger Australian economy in the process. It addresses the imbalance of our taxation system.

TAXATION 
We advocate holding a tax summit every five years to reassess and re-evaluate the tax burden on Australian citizens. This summit would invite input from community representatives, as well as stakeholders from peak union and business groups, non-government service organisations, representatives from retiree advocate organisations, charities and student representative groups from around Australia.
One major reform is increasing the tax-free threshold to $50,000, tied to a compulsory 10% superannuation contribution by income earners. This initiative has the following effects:

• Increasing the disposable income for anyone earning up to $50,000.
• Significant stimulation for local business as a consequence.
• Personal superannuation reaching around 20% (combined with employer contributions)
• Significant reduction of government expenditure on the ageing population.
• Raising of capital for Superannuation funds tied to government infrastructure programs.

We propose the following progressive tax scale:
INCOME TAX
The rate of income tax for earnings:

• Less than $50,000  : 0%
• $50,000 – $130,000  : 25%
• $130,000 – $200,000  : 35%
• $201,000 and above  : 45%

457 WORKING VISAS
The rate of income tax for earnings:

• $0 – $50,000 : 15%
• $50,000 – $125,000  : 30%
• ABOVE $125,000  : 45%

GST
AWF would amend the GST so that essential goods and services are exempt, applying GST only to discretionary purchases. This would include and not be limited to the removal of GST for:

• Personal hygiene items such as female sanitary products, razors, soaps, toilet paper, nappies etc.
• Household energy and water expenses.
• Educational services and related expenses.
• Telecommunications services including access to internet services.

PROPERTY
AWF would advocate the containment of negative gearing benefits to only one investment property. The priority for property ownership should be geared towards owner-occupiers, not multiple property investors. Housing affordability is at a crisis point across our nation.

• The reintroduction of probate to estates that hold over $10,000,000 in assets. Probate taxes would be set at 2% of the estate value if the estate held more than $10,000,000 in assets, excluding residential properties.

BUSINESS INCENTIVES

• The establishment of significant taxation benefits for businesses that procure Australian made products and services in the course of their operations.
• The expansion of taxation benefits and government assistance for companies investing in Australian research and development projects.
• Tax incentives for companies decentralising their operations in whole or in part, to regional areas.
• Tax incentives for businesses that create new jobs that are sustained for periods of three years or more.
• Tax incentives for businesses that employ apprentices or are partners in vocational programs.
• Tax incentives for businesses that implement life long learning and skills upgrades for their employees.
• Tax credits for businesses that implement good environmental practices.

TAXATION AVOIDANCE
​We currently have an environment where many organisations expect to avoid paying their fair share of tax. The position that the company tax rate of 30% needs to be reduced is flawed. This tax rate only applies to profit after expenses, and Australia provides a stable economic environment. In reality, the effective company tax rate sits below 20% with existing regulations, which is internationally competitive.
For companies and other organisations, company directors and overseas business interests:

• Stronger regulation and monitoring of multinational corporations. International corporations need to pay the tax they owe for economic activity in Australia prior to transferring funds offshore.
• Greater powers for the Australian Tax Office and related regulators to investigate and refer for prosecution any businesses and their representatives who are found to be unlawfully minimising taxation responsibilities
• Increasing fines and sentencing proportionate to the scale of the offence committed when parties are found guilty of unlawful tax avoidance.
• Outlawing of any “tax haven” options for Australian citizens, corporations, trusts or organisations. We need to eliminate off-shore tax avoidance.
• Tightening tax exemptions for business activities of religious organisations. Any organisation that turns a profit needs to pay their fair share of tax, including religious organisations. Public donations should remain untaxed.
• A review of family trusts and related tax avoidance schemes.