This year’s Federal Budget marks a watershed moment in what type of society Australians want for their country.
“Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all” (John Maynard Keynes). We have seen this writ large in the current budget with one of the most unfair, nastiest budgets in a generation. The Budget attacks the fabric of our society with cuts to education and health funding, the end of universal health care, the deregulation of university and TAFE fees, cuts to the ABC and SBS, attacks on the unemployed young people and so on.
The argument offered is that Australia really can’t afford all of this "middle class welfare", "we all have to make a sacrifice" (all, it seems, except corporations and the wealthy). The Government still went ahead with a $4 billion company tax cut. It did nothing to change the diesel fuel rebate that benefits the mining companies by millions of dollars a year. It left untouched the superannuation tax concessions for the wealthy, while removing the Low Income Super Contribution Scheme.
Australia doesn’t have a debt crisis, it has a revenue problem. Australians need to have a real discussion about tax levels in this country if they don’t want to create a new underclass of working poor; and want properly funded public education and health sectors, and a humane welfare system.
There is no doubt we need a debate on tax reform, but we don’t need to necessarily increase the goods and services tax (GST), a tax that at its heart is regressive. There are other indirect taxes that could be considered that would generate tax revenue that would fund education and health, a national disability insurance scheme and a proper welfare system.
Australians should be arguing for a Tobin or "Robin Hood" style tax on speculative currency and derivatives transactions.
Tobin Tax was proposed by economist James Tobin in the early 1970s. It was a designed to tax speculative financial currency transactions by levying a small percentage (less than 0.5 per cent) on each transaction. Tobin argued that not only would such a tax on these transactions bring stability to financial and banking markets it would raise billions of dollars for education and development.
Recently in the United Kingdom and in the European Union the concept of a Robin Hood tax or financial transaction tax (FTT) has been considered as a way of increasing tax revenue without increasing the burden on individuals post the global financial crisis.
The initiative of the 11 European countries implementing the proposed FTT of between 0.01 per cent–0.1 per cent on trades in stocks, bonds and derivatives is set to be implemented in 2016. The FTT was opposed by the UK government in the European court but that court recently rejected the UK’s objections. The tax, however, will raise billions of Euros to fund social programs.
The European countries implementing the FTT will not be setting a precedent. Numerous countries, including those with deep and fast-growing markets, such as Hong Kong, Singapore, South Africa, India and Switzerland, have FTTs that raise their governments billions in revenue every year.
Another way of raising more tax where the burden would not be regressive is for the Government to close the "transfer pricing" loophole used by large transnationals to shift their taxable income to low tax countries like Ireland or the Cayman Islands.
The European Union estimates tax evasion and avoidance from corporations using transfer pricing costs it €1 trillion ($1.33 trillion) a year. Currently the G20 nations are looking at multinational tax agreements where multinational enterprises should be dealt with by taxing profits in the jurisdictions where economic activities deriving those profits are performed, and where value is created.
Meanwhile Australians have a federal government that plans to cut personal income tax rates as a sweetener in the next political cycle.
Further cuts to income tax will lead to further public service jobs and service cuts, and ultimately an increasingly divided Australia.
For more information on the Robin Hood tax can be found at www.robinhoodtax.org.uk/.