Australia

‘Tax cuts for the rich’ slammed by Q&A panel

A tough question about the Morrison Government’s proposed tax cuts has sparked anger among Monday night’s Q&A panel just hours before the federal budget is released.Audience member Daniel Barnett told the program that if the government’s proposed stage two tax cuts were passed in full, a worker earning $200,000 a year would get a 4.5…

A tough question about the Morrison Government’s proposed tax cuts has sparked anger among Monday night’s Q&A panel just hours before the federal budget is released.

Audience member Daniel Barnett told the program that if the government’s proposed stage two tax cuts were passed in full, a worker earning $200,000 a year would get a 4.5 per cent tax cut, while those on $45,000 a year would receive a cut of just 0.5 per cent – and that the policy would cost upwards of $20 billion in the first two years.

He then hit the panel with this zinger – “Does the panel think that tax cuts for the rich is really the best way of stimulating the economy at a time when one in 10 people are out of work and JobSeeker is being cut?”

Entrepreneur Naomi Simson kicked off the debate by arguing that businesses were crying out for customers at the moment, and that the best way to boost spending and the wider economy and create jobs was through “an overall tax restructure”.

But host Hamish Macdonald asked if that option was justified at the same time as the JobKeeper and JobSeeker payments were being slashed.

Deloitte Access Economics economist Nicki Hutley picked up the thread, announcing she was “not in favour” of tax cuts.

“The old saying lies, damn lies and statistics. You can manipulate the way you present these tax cuts to say they’re fair and even under Stage 3 that the top 10 per cent will still be paying a certain percentage of the tax base,” she said.

“But they are earning more. It is how much you’re paying proportionate to how much you’re earning that I want to look at.”

The panel then clarified that Stage 3 wasn’t on the table at the moment, with health expert and former head of Australia’s Finance Department Jane Halton said the value of tax cuts depended on the nation’s priorities.

“We know people on lower incomes, if you put money in their pocket, they will spend it. We know that if you put money in the pocket of people on higher incomes, they’re more inclined to save it,” she said.

“If we’re on about stimulating the economy, you target people on lower incomes. That’s just the facts of the matter.

“There is, however, a problem we have in Australia which is this issue of bracket creep. So, what those tax cuts are trying to do, I think, is balance those two things. The question is where are your priorities?”

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She said a country that prioritised spending should target lower-income people.

“Give it to people who spend it. We have seen that in spades. We have had the data broken down for us that shows that it’s the supplements the government has provided that is what has got spent in the economy and kept us from being in more dire straights,” she said.

But the debate fired up after Assistant Minister for Financial Services and Superannuation Jane Hume and Shadow Treasurer Jim Chalmers clashed over the proposal, with Ms Hume pointing out that the tax cuts were “already legislated”.

“The government will make no apologies for wanting to allow people to keep more of the money they earn,” she said.

“Labor supported those tax cuts and supported the legislation. And what we know is the progressivity remains. We will still find the top 5 per cent of taxpayers pay by far the most amount of tax … Simplifying the tax system by removing that 37 cents in the dollar bracket will, in fact, benefit 94 per cent of Australians – will pay no more than 30 per cent top marginal rate. That has to be a good thing.”

Mr Chalmers then explained the ALP supported the first two stages of the government’s tax cut plan and having stage two brought forward, so long as there was additional tax relief for low-income earners, but slammed the proposed third stage.

“We haven’t been supportive of the third stage, because that third stage is the least responsible, least affordable, least fair and least likely to be effective,” he said.

“It is important to remember that for a worker who might be getting $50 a fortnight out of these tax cuts, if we’re predicting what might happen tomorrow night, many of them, millions of them, have just lost $300 a fortnight in JobKeeper.

“So they’re $250 in the hole. We need to remember that.”

Ms Hume and Mr Chalmers then repeatedly interrupted and spoke over each other, prompting Macdonald to interject and claim “I don’t think we need a repeat of the Trump Trump, Biden debate”.

Mr Chalmers finished the debate by insisting on making his final point.

“Tax cuts on their own aren’t a substitute for a more comprehensive plan for the economy. We can’t have the budget tomorrow night to just be another grab bag of headlines,” he said.

“It needs to be a comprehensive plan and tax cuts on their own are not enough.”

Opposition Leader Anthony Albanese has also indicated the ALP would support the tax cuts.

“We’ve of course argued last year that stage two of the tax cuts should be brought forward so there will be nothing surprising if we took a position consistent with that,” he told the ABC today.

The issue also caused anger on social media, with Twitter users arguing that tax cuts would do little to help those who had lost their jobs during the coronavirus crisis.

“The last thing I need is a tax cut. Like most people who have a job and earn over the average income, it will just go to savings,” one social media user posted, while another added: “This tax cut is more like cash hand out to (the) rich class”.

“Trickle down economics does not work,” another said, while another posted that “it’s a good way for the rich to get richer”.

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