Progressive Labour Party Taxation Policy
Endorsed by National Council, 30th January 2000

Aims of the PLP Taxation Policy

This document will discuss the following aspects of tax policy:

• the redistribution of wealth,
• the redirection of capital and productive resources
• the simplification and streamlining of the tax system
• a tax system used to foster science, industry and technology for the good of the community.

Preamble

The PLP acknowledges the need for a progressive tax policy to establish equity by redistributing resources between high and low income-earners.

Our very first priority in government will be to completely repeal the GST.

The GST represents the worst aspects of taking from the less well off and distributing the proceeds to the wealthy. The PLP aims to reverse the whole ALP/Liberal program of anti-labour tax changes which have reduced taxes for big companies and the rich, while slashing welfare and services for the rest of the population.

Our tax policy will be designed to give all Australians a fairer share of Australia's resources, to rebuild and enhance the social infrastructure and to create jobs, the PLP, through its taxation policy will ensure welfare for all people for the whole of their lives. We believe that providing income support to the lower income earners in a given family is preferable to providing tax rebates to the higher income earners in it.

Taxation policy will be used to generate income for necessary expenditure and to re-direct capital and use of productive resources.

Budgetary Policy will be recast to take into consideration the longer-term nature of our economic aims.

The PLP will conduct a thorough overhaul to simplify and streamline the tax system along the lines of equity and communal good. Our policy will utilise a progressive tax system on incomes, wealth and financial speculation, and will not levy consumption taxes with devices such as the GST.

Taxation policy will also be orientated towards the need to foster science, industry and technology which will benefit the Australian people and ultimately the international community. It will also be used to promote the development of co-operatives and collectives in all industry sectors.

Small sustainable agricultural producers, like the family farm, will be encouraged via the taxation system as well as by scientific support from government organisations. Selective import quotas and tariffs may be used to rebuild local production of necessary and ecologically safe goods and services to benefit the Australian and international community.

A Progressive Taxation Program.

Policy Aims

A PLP Government will:

• utilise a fair, steeply-progressive tax on private and business incomes.
• provide a substantial tax-free threshold and high rates for above-average incomes, such that the maximum after-tax income anyone can receive will be no more than five times the lowest income;
• utilise progressive asset taxes,
• reject general consumption taxes, such as VAT or GST, due to their inequity, and repeal the GST when we are elected to government.
• close tax loopholes, including Trans-national corporation transfer pricing arrangements;
• ban tax minimisation schemes used by individuals and companies;
• stop tax write-offs for equipment where it encourages premature obsolescence;
• consider taxing movements of speculative finance, by adding a tax on such transactions as proposed by Nobel Prize winner James Tobin;
• use tax controls to create secure and socially productive forms of employment; to re-direct resources towards key, strategic investment and away from unproductive and wasteful investment, and to encourage environmentally sustainable production.

1 Personal and Income Taxes

Pay As You Earn (PAYE) tax shall be overhauled to ensure the rich pay their share.

Close loopholes and eliminate tax evasion and avoidance by high income-earners, estimated at $6 billion. p.a. in 1998.

PAYE should be a graduated tax according to income. We totally oppose a flat income tax.

The party will utilise a fair, steeply-progressive tax on private and business incomes, with a substantial tax-free threshold and high rates for above-average incomes. Marginal tax rates to be adjusted so that the Total Taxes paid on incomes from the threshold to $35,000 are reduced substantially; those around $40,000-$60,000 to remain at similar levels as at the present; for incomes upwards of this, marginal tax rates and total tax to be increased sharply.

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• Countering bracket creep for lower and middle incomes, could involve a combination of adjusting rates, bracket boundaries, and the taxfree threshold. Bracket creep to be adjusted according to the Consumer Price Index.
• Threshold Level of Personal Income tax to be raised immediately.
• Principle to be introduced of No tax on a basic living wage, the level of which changes according to whatever conditions/reforms prevail at the time.
• Extra impost of 10% or 5% over PAYE rate on income derived from property, assets, shares, rents, other unearned income, compared with rates for wage or social security income.
• Abolish family trusts as a means of tax avoidance.
• Rebates through the tax system are an inprecise way of distributing wealth. They tend to favour those on higher incomes and those who are not above the tax threshhold may miss out. This problem would be accentuated with our more steeply progressive PLP tax policy.
• All of our policies need to be integrated/read together to give an overview of the PLPs program for ensuring the needs of all members of society are met by that society.

2 Institutional and Company Taxes

Tax on company profits shall not be less than the top marginal rate for individuals. However, tax concessions will be introduced for re-investment of a percentage of profit in consultation with unions and employees.

PLP will cut allowable expenses for companies. National and multinational companies will be charged full company tax;

The PLP favours the abolition of negative gearing. If necessary protection for home mortgagees and tenants will be provided. The negative gearing system encourages and rewards speculation, unproductive investment, takeovers, inflation of land values and interest rates, and therefore adds to the rising cost of living.

• Abolish Dividend Imputation under which shareholders receive a tax credit for tax paid by companies, effectively amounting to the partial relief from taxation of dividends. According to Australian Taxation Office figures (Taxation Statistics 1990-91 p.45) the amount of the credit in 1990-91 was over $1,5 bn, of which $691m went to people with taxable incomes over $100,000.
• Payroll tax would be scrapped. (State tax)
• Local government levies on local businesses of 1% of profit shall be allowed if spent on local job creation.
• Taxes on public services and assets will be lifted. Such taxes have been imposed on the public sector since Menzies in 1956. Profit shall not be the aim of the government services but true service to the public.
• Bank charges and fees to be abolished.
• Fringe Benefit Tax will be maintained

3 Wealth, Fund and Transactional/Flow Taxes

Introduce progressive asset taxes, like wealth, inheritance and death duties. Family homes under $1m exempted. A Wealth Survey (the first since 1915) shall be undertaken with a view to the imposition of a wealth tax.

The assets of rich residents and assets held by non-residents would be subject to valuation each few years and subject to a tax of around 5 per cent where the aggregate value of the assets is greater than the value of the average family residence.

A property / land tax on speculative property transactions shall be implemented, including 100% tax on increases in the unimproved value of land (ie social confiscation of the proceeds of speculation and developmental inflation in land values). To impose a capital gains tax at 10 percent of the net gains greater than the value of the family home.

• Estate and gift duties, abolished in the late 70's and early 80's, to be restored, along with most OECD countries.

4 Consumer, Product and Indirect Taxes.

• A code of indirect taxation.
• Reject general consumption taxes such as VAT or a GST. The GST tax will be repealed by the PLP on ground of inequity. Moreover, the PLP rejects the notion that this package represents a major tax reform.
• We will introduce graduated wholesale or retail taxes on on a redefined list of luxury items. A code of indirect taxation. Implementation of levies on redefined harmful products.
• A carbon tax of $23 per tonne on carbon dioxide & other toxic emission would raise $6.3 Billion. Severe taxation penalties for any toxic/harmful substances or emissions.
• Elimination of tax deduction for commercial advertising.