Australian Capitalism And Gst On the 13th August 1998, the Prime Minister, The Hon John Howard MP held a press conference at Parliament House to launch the Federal Government’s tax plan for Australia’s future. The plan incorporates significant historic changes to the Australian taxation system, which are to be guided by five key principles. The key principle of the Federal Government’s tax reform proposal that is creating speculation and debate is the introduction of the Goods and Services Tax, commonly known as GST. This consumption tax has come under intense public and political scrutiny and questions have been raised as to the economic fairness of this proposal. According to Macionis and Plummer (1997, p.420) capitalist economies produce a higher overall standard of living but also generate greater income disparity. The inequity of Australia’s current economy is evident from the media release issued by the Australian Council of Social Services (ACOSS) 4pm Wednesday 17 March 1999 in response to the taxation statistics that were released the same day.
Michael Raper, President of ACOSS stated that the taxation statistics revealed the gross inequalities in the distribution of wealth in Australian society today with The top 10% of Australians owning 52% of the nation’s wealth, while the bottom half owns a paltry 3%. On balance, does a capitalist economy promote a fair distribution of wealth and social power? I say not. Political support is gained by appealing to members of society with promises to act in their interests, more often directing this appeal to those individuals with wealth, social power and influence. The multi-million dollar advertising campaigns supporting the Federal Government’s tax reform package and in particular the proposal of the Goods and Services Tax is funded by big businesses. The same big businesses that will benefit from the implementation of the Goods and Services Tax and that will benefit from the 30% cap on the Capital Gains Tax, an option being considered that can only strengthen the big businesses social power and capitalist ventures within Australian society.
This supports the Marxists theory that states Basically, the state always works in the interests of the dominant, ruling, economic class: it favours and supports ‘capital’. (Macionis et al 1997, p.452) A media release issued Wednesday 14 October 1998 by the National Tax and Accountants Association in regard to the inequity of the proposed income tax system also supports the Marxist theory. According to Ray Regan, President of the National Tax and Accountants Association, under a GST big businesses will continue to fly first class, travel around in their limousines, go on junket trips overseas and live a lavish lifestyle, but not pay one cent more tax. This is not a fair taxation system; an efficient taxation system should not be beneficial to some and not others. Bennett (1992, p.222) writes, Politicians rarely confront the public face to face to discuss issues and policy yet it is accepted practice in the Australian political arena. Instead of making an effort to understand issues too many people base their decisions on what they are told and accept this at face value, they do not question or seek out the underlying truths.
An example of this is the initial media representation of the Goods and Services Tax exemptions. The government believes that to apply GST to education would discriminate against private providers (The Howard Government 1998). The exemptions were accepted and applauded by the public as they were led to believe that all charges, in particular regard to education, were to be exempt. The National Tax and Accountants Association soon alerted the public of this gross misrepresentation. Ray Regan in a media release issued 30 July 1998 states, it is very important for the public to quickly understand that with health, education and childcare the Government is most certainly not talking about a blanket exemption whatsoever.
In reality, each of these three essential items will have many components .. that will be subject to the new GST tax which people will have to pay for the rest of their lives. The GST exemption is applicable to school fees only, not uniforms, texts, transport etc. essential components of the current education system. The equity of GST-free private education that includes boarding school accommodation should also be questioned. This aspect of the education exemption does not display equality as it is in general only those families of wealth and social power (in particular within the framework of the old boys network therefore politically influential) who can in fact afford private education.
Should we be making it harder for Australian families to have and raise children? Independent Senator Brian Harradine in his first detailed speech on tax reform posed this question to the Senate. This question was in relation to Senator Harradine’s belief that key aspects in the proposal of the Goods and Services Tax would increase the tax burden on families and even discourage people from having children by taxing the necessities of life. (The Daily Mercury, Thursday April 22, 1999) Senator Harradine’s concern is in reflection of the fact that Australians are heavy consumers of services which are currently not subject to a consumption tax, these services include: newspapers, electricity bills, mortgage and rent payments in addition to essential items such as food and clothing. A key equity issue of political debate is derived from the Government’s strategy to implement the Goods and Services Tax on the two essential items of food and clothing. Excluding food and clothing from GST would deliver much larger dollar benefits to high income earners than low income earners. (The Howard Government, 1998, p.80) In an interview with Michael Raper on A Current Affair with Ray Martin, the Treasurer, the Hon Peter Costello MP defended this issue by stating that food being a part of a broad-based indirect tax was equitable.
The Treasurer stated that high income earners spend 2.8 times more on food, including restaurants, than low-income earners. If you took food out, it would be an enormous advantage to high-income earners .. Yet according to the ACOSS Fact sheet on Poverty issued 22 October 1998, over 2 million Australians are currently living below the poverty line. This is not justification for sustaining the current capitalist economy of Australia by further oppression, this is validation that the economic restructuring that Australia is enduring needs to be beneficial to all Australians, in particular the low to middle income earners. The introduction …