CQ Today – Tax freedom under threat

This week marks ‘Tax Freedom Day’ for the average Australian. The average Australian taxpayer pays about a third of their income in taxes, so for the first four months of the year you have been paying taxes to the government. Now that it is May, you can finally start working for yourself and your family. Sadly, Tax Freedom Day has been getting later and later in recent years. After four years of this Federal Labor Government, taxes are at record levels. But Labor is not content with that. They want more taxes. If the leaks from this year’s Budget process are true, we are all about to get a lot more in increased taxes under Labor. Labor wants a new tax on property by ending negative gearing arrangements. At the last election, the PM was asked at one of the debates whether negative gearing was “off the table”, and he responded that “negative gearing is off the table”. The Prime Minister was unequivocal: “Yeah, it’s off the table … the key is supply, and that measure will not boost supply.” How can anyone believe Labor when it rules out death duties before the next election, when it has not kept its promises on tax from the last election? Labor wants a new tax on investment. For months there has been speculation that Labor would remove the capital gains tax “discount”, but this so-called discount is not really one. The 50 per cent discount is a rough estimation of what part of a capital “gain” is from inflation. If Labor changes this, people could face a tax even if it is only inflation that has increased asset values, and even when they have received no real increase in wealth. Labor wants a new tax on small business by charging a minimum tax rate on distributions from trusts. Trusts are just like companies and allow small businesses to smooth volatile income levels, but now Labor wants to slug the small businesses that are struggling during the worst energy crisis in 50 years. The Labor Treasurer justifies these new taxes as a way to “build trust”. I have heard some pretty flimsy arguments for new taxes before. Carbon taxes are meant to change the weather, sugar taxes are meant to make us thinner, but I have never heard the absurd idea that taxes help “build trust”. Labor seems lost in a cyclone of its own spin. Labor promised not to introduce many of the taxes it plans to next week. Breaking that promise destroys trust. There is no doubt that there is a lack of trust in politicians, but the best way to restore faith would be for the Labor Party to do as it promised it would do before getting elected. The other issue with all of these taxes is that they ignore the real problems facing Australians today. I have spent the last two months knocking on doors, meeting people in pubs and standing at polling booths at the Farrer by-election. I have met thousands of ordinary Australians, and none of them have asked me to change the capital gains discount regime. What Australians would like is just some help with the pressure of high inflation and high interest rates. There are two main ways that the Government can help with that. It could rein in its own spending so that it takes pressure off inflation and so that the Reserve Bank does not have to lift interest rates by as much. The other way the Government can help is to strengthen the economy. If our economy grows, then inflationary pressures are reduced because the excess money supply can be soaked up by more economic output. But higher taxes do the opposite and weaken our economy. If we want freedom from the high cost of living, we need a government that wants to free us from the high burden of Labor’s taxes.