The Guardian 20 April, 2005

TAKING ISSUE: with Marcus Browning

The big tax con job

The Federal government is trying to force the states to cut business taxes in exchange for GST revenue. "States vie for biggest slice of GST pie" ran a headline in The Australian newspaper last week. That's the spin, anyhow. Big business is also calling for corporate and personal taxes to be aligned at a rate of 30 percent. Remember the level playing field? At the same time PM John Howard is tying a bogus "debate" about "centralism" and "federalism" to taxes. This latter is a pointer to what is behind the government's current smoke and mirrors tax show.

When Howard talks about centralism and federalism he does not mean the Commonwealth taking over responsibility for running and funding services vital to the people. After all, his government intends to completely privatise welfare, Telstra, education, health and anything else that will turn a profit for their big business mates.

What he means by "centralism" is the wielding of power from Canberra on behalf of the corporate sector. Federalism, if you take the line of the former Whitlam Labor government (which is what Howard is indirectly playing on), actually means decentralisation: for example, the setting up of industries and services in rural centres instead of the major cities, thus creating jobs. That is not Howard's objective.

A sure indicator of the government's agenda is the Howard double-talk which has been flowing like verbal diarrhoea. So, when he attacks what he refers to as the "dead weight" of the state industrial relations systems, he means he wants federal control over industrial relations so he can attack workers' rights by destroying their unions, their awards, wages and conditions.

When he says state TAFE colleges are "failing to deliver what the nation needs", he means that the reason his government slashed funding to TAFE is to force the colleges, using threats of more funding cuts, to open their doors to for-profit training groups and "competition".

In fact, he stated openly last week in a speech to Liberal Party think tank, the Menzies Research Centre, that the government wants vocational education to be "more responsive to labour market and employer needs".

On the other hand, the government wants to take no responsibility for public hospitals and is leaving Indigenous affairs to the states while stating he has never been one to "genuflect uncritically at the altar of state rights".

But the biggest con job in all this is the attempt by the government to put a positive spin on the GST. Its introduction was one of the most regressive economic acts in Australia's history in terms of its affect on the incomes of working people.

Introduced in 2000, it imposed a tax on goods and services on top of already existing taxes on income. It increases the tax take from the community without regard to income and has allowed income tax cuts for wealthy individuals and corporations. That is its regressive nature. The GST eats into the living standards of low and middle income earners, and all people who are wholly or partly dependent on social welfare payments.

Everything fares, clothing, school books, cinema tickets, rents in fact all services and essential household items have been forced up in price because of the GST.

In connection with this is the government's latest scheme to force unemployed single parents who are mostly women with school age children into work by opening extra child care places. One of the earliest GST lies to be exposed was the claim that child care services would not be affected: just when you thought they had reached the apex of deception and cynicism, the Howard government surpasses itself.

Howard has overseen the rise of a private for-profit childcare monopoly funded by taxpayers' money through the child care fee relief system. He has overseen a cap being placed on the number of outside-school-hours child care places as part of a funding cut.

On top of that, from July 1, 2000, when the GST became law, the Government replaced the Child Care Rebate and the Child Care Assistance payments with a lower single Child Care Benefit.

It also ended Centrelink's administration of childcare payments and fee relief. This forced each individual centre to do the bookwork for all parents using their service. No extra funding was provided for this administrative task.

As a result, today, even if a single parent forced to take whatever job was offered at pain of losing welfare payments could find a childcare place, the cost would be way out of reach.

A progressive tax system, which makes those with higher incomes pay a higher rate of tax, is needed to replace the GST and the government's restructure which cut tax rates for big business and increased those paid by workers.

Corporate tax avoidance loopholes must be closed. The tax-free threshold must be increased for people on low incomes.

In other words, Australia needs a tax system that is simple, transparent and progressive.

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