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Issue #1606      August 14, 2013

You will pay for Abbott’s tax cuts

Having declared war on budget deficits and government debt, the Coalition has now announced a multi-billion dollar cut in company taxation. The result will be less income for the government. No government can return a budget to surplus and pay off debts by cutting its income. The company tax cuts will have to be paid for by someone, and it’s not going to be big business.

Smug.

“We must start living within our means …” is the message from the Coalition in their plan for “Real Solutions for all Australians” and “start paying down government debt to protect ourselves against any future economic shocks and to avoid leaving a debt legacy to our children.”

“Living within our means” is code for billions of dollars in cuts.

The Opposition has plans, still being kept under wraps, to undertake a massive program of cuts – which it describes as “delivering a better future for all Australians”.

Liberal and Labor can debate all they like whether it is $70 billion or $50 billion in cuts, but two things are certain. The aim of the company tax cuts is to deliver bigger profits for big business and it is the people who will pay for them. For those who depend on government services and pensions, the future under a Coalition government is looking grim.

At the same time as cutting corporate taxes, the Opposition has committed to additional expenditure on education (“Gonski” reforms) and the National Disability Insurance Scheme (DisabilityCare Australia).

Opposition leader Tony Abbott’s planned cuts to the mining tax and emissions trading scheme, would also reduce government income, but in the big scheme of things the amount lost in future years would not be so serious as the corporate tax cuts.

Every extra dollar less paid by business in taxation is an extra dollar in profits. That is the aim of the exercise.

Australia is already one of lowest taxing OECD countries, with only Chile, Mexico, the US and Korea raising a smaller proportion of GDP from national, state and local taxes. Incremental reductions in company and personal tax rates over the past 25 years have resulted in the loss of billions of dollars to government coffers. (See Editorial for more details.)

Abbott’s proposed 1.5 percent company tax cut is another step towards reducing the company tax rate to 25 percent, from a high of 49 cents under the Hawke/Keating government.

The Coalition is following the model of former Liberal PM John Howard and Queensland Premier Campbell Newman, by keeping most of its anti-people policies under wraps until elected. Abbott knows that it would be electoral suicide to announce his plans before taking office.

Under a Coalition government the public sector would be crucified. At least 12,000 public servants would be sacked. Services would be cut or privatised, pushing up prices and reducing quality and accessibility. Single parents, the unemployed, age pensioners and other welfare recipients would feel the full brunt of punitive cuts.

Instead of admitting what lies ahead, the Liberals continue to trot out their dishonest promises about “generating jobs” and “establishing a strong and prosperous economy” for all Australians. The only prosperity will be for the big end of town.

GST on agenda

The Liberal Party plan states that once election it would: “Immediately establish a Commission of Audit to identify savings and efficiencies in all areas of government, so we can reduce government debt and start delivering better value for money and sustainable Budget surpluses in the future.” There will be a review of the tax system.

This is the same model that Howard used to justify previously unannounced budget cuts and other anti-people measures.

While Abbott says there are “no plans” for an increase in or extension of the GST into exempt areas such as education and health, there is little doubt that after the Audit, it will appear on the agenda along with a number of other nasties.

Apart from budgetary cuts and company tax cuts, the Coalition has a hit list for workers, again not for pre-election disclosure, to assist their big business mates. These include abolition of penalty rates, a reduction in the minimum wage and an all out assault on trade unions and workers’ rights.

It will be WorkChoices on steroids, using the language of the Fair Work Act at the same time as gutting the content. Unions can forget about the right of entry, collective bargaining or any form of industrial action. The powers of the construction industry special police force, the ABCC, will be strengthened and extended to other industries.

At the same time there will be $1 billion in savings to businesses through removing a number of regulatory provisions, making it easier and quicker to get permits and licences.

A Coalition government would “End government waste and ensure better value-for-money in government programs so that Australia no longer needs to keep borrowing money to prop up its Budget.” This includes the sacking of 12,000 public servants in the first round of cuts. Public hospitals and schools will be privatised and possibly the running of government departments as well as services.

If the Coalition does win government, it is important that they do not gain control of both Houses, without any possibility of curbing their most destructive and painful policies. The Communist Party of Australia is urging Guardian readers to support the Greens in the Senate.   

Next article – Editorial – Pie in the sky?

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