The Australian Council of Social Service cautioned that the upcoming Federal Budget must continue to strengthen public revenue to secure vital community services and supports into the future, rather than squander billions on unjustified tax cuts.

In releasing the ACOSS Budget Priorities Statement, CEO Dr Cassandra Goldie said, “It would be a big mistake for this government to press ahead with personal and corporate tax cuts when we’re facing major funding shortfalls in vital areas such as the NDIS, health, needs-based schools funding, and action to reduce poverty.

“It would be unconscionable to pursue tax cuts at the same time as slashing essential benefits and services affecting people on the lowest incomes, particularly when the budget is still in a weak position.

“We cannot afford to repeat the past mistake of handing out unfunded tax cuts in the run-up to elections. The eight annual tax cuts from 2003 to 2011 largely created the budget problems the government now faces. We all know that tax cuts today mean cuts to essential services down the track.

“Income tax is not the main pressure on household budgets. The majority of personal taxpayers are paying less income tax now than they would have paid under the 2003 tax scales before all those tax cuts were given.

“The biggest increase in the cost of living over the last six years has come, not from taxes, but out-of-pocket payments for essential services. From 2011 to 2017, health care costs for households rose by 40%, child care rose by 57%, schools by 37% and dental care by 14%. The CPI rose by just 11% over this period. A ‘sandwich and milkshake’ tax cut isn’t the answer to these pressures on household budgets.

“We have a choice: either pay more up front for these services, or share the cost through the tax system. In this submission, $10 billion a year is earmarked for health, aged care and disability services from revenue and savings measures including a stronger Medicare Levy, reducing the generosity of superannuation tax breaks for retired people, abolition of the Private Health Insurance Rebate, and a tax on sugary drinks.

“Ultimately, we think the best and fairest way to raise revenue is to remove tax shelters, loopholes and other unjustified inconsistencies in the tax base.  These include capital gains tax concessions, negative gearing deductions, the use of private trusts and private companies to avoid paying personal income tax, further steps to curb international business tax avoidance, and remove business tax breaks that are not fit for purpose.

“Proposed new spending is in areas of critical underfunding that have been neglected for decades and which have especially impacted people on the lowest incomes. These include raising below poverty line income support payments, action to address unaffordable housing, and new investments in mental health and dental health services.

“The most urgent priority is to lift the unemployment payment, which has not been increased in real terms for 24 years.  We propose a $75 per week increase in income support payments for single people who are unemployed or studying fulltime, reflecting new evidence on basic living costs.

“The May Federal Budget provides this government with a clear choice: it can pursue a senseless tax cut handout now and leave the nation with the prospect of another horror budget down the track to pay for it. Or it can take the fair and sensible path of deferring any tax cuts until we can actually afford them – when the Budget is in better shape and essential services and poverty alleviating support payments are properly resourced.”

Download ACOSS Budget Priorities Statement

Summary of ACOSS recommendations

Revenue measures

  • Curb the use of private trusts to avoid personal income tax and conceal income – $1.5b in 2019-20
  • Prevent the use of private companies to avoid personal income tax – $1.4b in 2019-20
  • Curb international business tax avoidance – $500m in 2019-20
  • Reduce Capital Gains Tax concessions – $600m in 2019-20
  • Abolish fuel tax credits for off-road use – $2b in 2019-20
  • Reform alcohol excise so that tax is levied consistently on the basis of alcohol content – $2.3n in 2019-20
  • Abolish the Private Health Insurance Rebate – $3.3B in 2019-20
  • Tax superannuation fund earnings after retirement to help finance health and aged care – $1.5b in 2019-20
  • Remove age-based tax concessions to help finance health and aged care services – $700b in 2019-20

Expenditure Recommendations

  • Increase allowance payments for single people by $75 per week – $3.2b in 2019-20
  • Index allowance payments to movements in earnings – $240m in 2019-20
  • Reform family payments to better target assistance and reduce child poverty – $630m in 2019-20
  • Establish a Social Security Commission – $8m in 2019-20
  • Improve the effectiveness of jobactive – $250m in 2019-20
  • Introduce a Career Transitions Scheme – $70m in 2019-20
  • Additional capital funding to state and territory governments to enable growth in supply of social housing to people on low incomes – $1b in 2019-20
  • Develop a new remote Aboriginal and Torres Strait Islander funding agreement: $450m in 2019-20
  • Increase investment in affordable, accessible dental care for children and adults – $1.2b in 2019-20

Overall Budget position

  • We propose modest additional expenditures of $3.2B ($6.7B in 2019-20), and an increase in revenues of $3.4B ($13B in 2019-20), reducing the budget deficit by $0.3B ($6.5B in 2019-20). Based on the budget estimates in the 2017 MYEFO statement, this would result in a surplus of $3.9B in 2019-20.

(Source: ACOSS)

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