Earlier this year, former Treasurer, Wayne Swan, announced new caps on tax deductible education expenses, which apparently risked growing out of control:
“The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.”
The changes were seen as a significant savings measure that would save some $500 million over the forward estimates.
However, as noted by Paul Wallbank at the time, the caps on self education costs were curious in light of the unlimited deductions allowed for negative geared property investment:
So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.
We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government billions of dollars last year.
So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.
This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.
What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers…
That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.
Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.
Wallbank’s comparison with negative gearing is apt. According to the most recent ATO Taxation Statistics, negative gearing losses dwarf those of self education expenses, with 1,213,597 taxpayers in 2010-11 claiming a average $10,947 of losses against their property investments, totaling some $13.3 billion.
Thankfully, the new Coalition Government has seen through the hypocrisy of Wayne Swan’s policy and has abandoned Labor’s plan to cap self-education expenses.
As long as the Government persists with an expensive, unproductive and socially damaging tax policy like negative gearing, it most certainly should not wind back legitimate tax concessions aimed at boosting educational attainment and productivity.
