With a Federal election drawing closer (a tentative mid-May date is on the cards), the time for compromise is coming to a halt. For the next couple of months, each party’s motto is to bring down the opposition or upsell themselves…whatever works more in their favour.
Labor’s focus on only the first stage tax cuts pretty much gets the vote of all low-income earners blaming the rich for their inability to become rich.
And allowing newly-built homes to keep negative gearing no doubt only adds to their appeal within this demographic, helping young Australians buy their first home, without having to compete with people receiving government support to buy their sixth.
So in an attempt to curb this vengeful attitude towards our middle- and high-income earners, Prime Minister Scott Morrison and his team have tried informing the Australian public of the risks of these proposed tax break changes through fear campaigns that highlight the unpredictability of the future state of the economy.
But Chris Bowen, who would be Australia’s treasurer under a future Labor government, believes the Coalition’s efforts to elicit fear over Labor’s plans only make the reforms more justified, as they will put the government’s budget at a higher surplus — a worthy security blanket in a volatile economy.
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Labor’s plan fights against generational wealth
According to the Australian Associated Press, Bowen plans to tell the National Press Club in Canberra today that ‘the case for our policies is strong’.
‘Every time the treasurer tries to stoke fears about our policies he increases the moral authority of the mandate we seek, if we receive it.’
In addition to homes built after 1 January, Labor says they will keep negative gearing for those already using the tax break.
But their planned changes to capital gains tax, ditching refunds to shareholders with ‘excess’ franking credits, as well as their proposed reform on family trusts, strongly points towards a government fighting against hard-earned, accumulated family generational wealth.
Adding to this their refusal to adopt stage two and three of the government’s tax scheme, and it’s a clear picture of a government that’s all about the poor man.
Why? Because that’s what will win the election.
Never mind the fact that ignoring stage two of the cuts will mean senior nurses, teachers and police officers will be out of the running for a tax break.
Of more concern is Treasurer Josh Frydenberg’s analysis that shows Labor’s negative gearing changes could increase rents, make house prices fall more steeply or slow housing construction. And it will also hit Aussie taxpayers with $200 billion worth of hikes over the next decade.
Doesn’t sound much like an eye out for the poor now, does it?
But it’s all fine and dandy, Bowen says. Do you want to know why? Because the government will have more money sitting in their rainy-day fund.
Budget surplus more important than tax breaks?
Yes, that is what Bowen believes is the big debate winner for these absurd changes to our economy.
‘At the election we’ll present a fiscal plan with bigger budget surpluses and one that pays down more debt,’ he’ll say in Canberra today, convinced it will settle all concerns.
The theory being that a larger surplus is what Australia needs in this uncertain international economy that Morrison keeps forewarning.
Though we’re pretty sure Aussie families would rather that extra coin in their own pockets rather than in the government bank.
But never fear, Bowen says, as a Labor government’s tax-to-GDP ratio would be just over 24%, according to a recent KPMG analysis.
‘We’d have a lower tax take as a proportion of the economy than under the Howard years,’ Bowen stresses.
That may be so, but if we aren’t mistaken, Australia is voting between Morrison and Shorten. So in terms of tax-to-GDP, the Morrison government actually take that thrown, keeping the ratio under 24% since ScoMo became PM.
So you may want to do a fact-check on those debate cue cards soon, Bowen. ScoMo is expected to announce the election date any day now.
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