In August last year, Tony Abbott called to critics of the 2014 Budget, “If you don’t like what we’re doing, come up with your own alternative!” He may be regretting those words now with the The Australia Institute releases its report entitled It’s the revenue stupid: Ideas for a brighter budget.
The report by the independent public policy think tank says the Government has a revenue problem as opposed to a spending problem.
“The Government’s single-minded focus of cutting spending primarily to low income households in order to reduce the budget deficit has been rejected by economists, rejected by voters and rejected by the senate. It has been branded unfair and the government has been thrown into confusion and chaos as it searches for an alternative budget plan”.
The paper, which was commissioned by action group GetUp!, proposes eight measures – some more difficult to swallow than others – that could earn the budget $40 billion in savings each year.
The eight proposed policies are:
- A micro tax on high-frequency trading. This policy targets big banks trading investments at huge volumes. A tax of less than half a per cent on these transactions would raise more than $1 billion per year. Budget gain: $1 billion.
- Limit tax avoidance by the wealthy. Apply the “Buffett rule” to cap loopholes that allow Australia’s top 1 per cent of income earners to pay less tax. According to GetUp! Last year 55 mega-wealthy Australians paid zero tax. Budget gain: $2.5 billion.
- Reform negative gearing. Restructure negative gearing so it only applies to new properties, reducing the number of people who receive tax breaks on their income. Budget gain: $3.5 billion.
- Scrap the capital gains tax discount. The report found the capital gains tax predominantly benefits the wealthy and could be scrapped all together. Budget gain: $4 billion.
- A duty on wealthy estates. Place an inheritance tax on large estates. Budget gain: $5 billion.
- Super profits tax on big banks. This tax would apply to the mega-profits made by our largest financial institutions. Budget gain: $5.5 billion.
- Reform superannuation tax concessions. Current tax breaks on super apply to the highest income earners; the report suggests switching this around so low income earners receive the tax concessions. Budget gain: $9.5 billion.
- Cut fossil fuel subsidies. With the government set to spend billions of dollars on Direct Action, it’s inefficient for it to continue to lose billions of dollars in fossil fuel subsidies. Budget gain: $11.5 billion.
Read It’s the Revenue Stupid: Ideas for a brighter budget here.
Which of these ideas do you think the Government is most likely to go for? And which will never see the light of day?