Let’s talk about tax, baby
The federal government plays opposition to the Victorian budget
The federal government is doing a more comprehensive job of attacking the Victorian state budget than the federal Opposition did of attacking theirs, berating the state for increasing taxes rather than just racking up debt, like they did. It comes after the Victorian treasurer, Tim Pallas, yesterday revealed a mental health and wellbeing levy to fund the state’s $3.8 billion investment in mental health (65 per cent more than the federal government committed to the same cause last week), along with previously announced increases to land taxes and stamp duty. Prime Minister Scott Morrison and Treasurer Josh Frydenberg have spent much of their day commenting on Victoria’s budget rather than their own, joining The Australian and the AFR in a pile-on (“Victoria’s horror budget” screams the AFR front page, giving the state little credit for the kind of responsibly funded spending it has been calling for from the federal government). The state budget is a gift to the federal Coalition, which would much rather talk about Labor’s evil taxing ways than the giant red hole in its own forecasts, and it is keen to use the opportunity to paint Labor as big taxers at both state and federal level. “Labor are just putting up taxes again because that is what Labor does,” Morrison told reporters. “Labor is whacking Victorian families and businesses with higher taxes,” said Frydenberg. But who is actually getting taxed here?
Morrison, Frydenberg and the business community are particularly incensed by Victoria’s new payroll tax, which is being used to fund its huge – and hugely warranted, according to the royal commission – new spend on mental health. Frydenberg has labelled the tax a “job killer”, while Morrison said, “this is the worst time that you could increase taxes on the Australian economy”. But the 0.5 per cent surcharge, as the Coalition would no doubt rather that no one noticed, will apply only to businesses that pay more than $10 million in wages, or the top 5 per cent of companies, with a 1 per cent surcharge on those paying above $100 million in wages. Acting premier James Merlino has been defending the “very targeted” levy, noting that many of the 9000 companies that would be affected are multinational corporations, while Treasurer Pallas said the state had approached the Commonwealth to incorporate the costs into the Medicare levy, but it had “very little inclination”. “We were left, once again, to our own devices,” he added. (The federal government is itself spending an extra $2.3 billion on mental health, but chose to go deeper into debt rather than raise revenue for that spending.)
Some of the poor employers to be hit by the levy, the AFR notes, include “Wesfarmers, Coles, Telstra, BHP and the banks” – not exactly the businesses “looking to get up on their feet” that Morrison invoked today. And as Guardian Australia’s Josh Taylor notes, the types of businesspeople speaking out against the payroll levy might just be doing the Victorian government a favour, with Chris Lucas of Chin Chin (known for underpaying its staff) and Gerry Harvey of Harvey Norman (known for pocketing millions in JobKeeper) not exactly the best business spokespeople.
But that’s not the only budget repair tax in Victoria that the formerly surplus-obsessed, now debt-happy Coalition has taken issue with. Frydenberg and his friends at the AFR are also furious over an increase in land tax and stamp duty – or “taxes on home buyers” as the treasurer puts it. These taxes are aimed at high-end property buyers, well-off landlords and exclusive men-only clubs, with the stamp duty increase only applying to properties worth more than $2 million. But you wouldn’t know it from Frydenberg’s claims that “Labor is whacking Victorian families” with higher taxes. There are concerns, in this case, that the increase may start to hit more and more Victorians, with half of the houses in Melbourne’s middle-ring suburbs likely to rise above $2 million within a decade. Pallas has defended this tax too, noting that a $2.2 million property will face a $2000 increase in stamp duty, but will likely rise in value by 100 times that amount over the next 12 months. Not exactly a taxing ask.
All this, and yet the budget bottom line is still worse off, the AFR complains, with $5.6 billion in new taxes but $11.5 billion in new measures. Imagine how much worse it would be without the taxes. The Victorian government has been mercilessly attacked for its “big spending, big taxing budget” by the very same media who either praised the federal government for its “big spending” one, or called for more responsible spending.
Today’s tax talk is likely only a precursor to the campaign the Coalition hopes to run against Labor in the lead-up to federal election, with Morrison and Frydenberg keen to focus on what taxes Labor might inflict (or what scheduled tax cuts it might undo), rather than on the fact that they haven’t actually got a plan for budget surplus in the next decade. The Coalition will do its best to paint any tax as a tax on struggling families and desperate businesses, even if it’s directed at big business and wealthy home buyers, as Victoria’s new taxes are. The trick for Anthony Albanese’s Labor Party will be to figure out how to push back against the idea that all taxes are created equal.
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The federal government is doing a more comprehensive job of attacking the Victorian state budget than the federal Opposition did of attacking theirs, berating the state for increasing taxes rather than just racking up debt, like they did. It comes after the Victorian treasurer, Tim Pallas, yesterday revealed a mental health and wellbeing levy to fund the state’s $3.8 billion investment in mental health (65 per cent more than the federal government committed to the same cause last week), along with previously announced increases to land taxes and stamp duty. Prime Minister Scott Morrison and Treasurer Josh Frydenberg have spent much of their day commenting on Victoria’s budget rather than their own, joining The Australian...
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