Below is a guest post from MB reader, Michael Clanchy:
Like the advertising jingle for that brand of hamburger, this tune tells its own story:
“Wealthy people and Corporates all know,
The Welfare is better at the ATO”
More and more citizens are becoming aware that, while the Australian Tax Office (ATO) collects revenue, it leads a double life. It also operates as a quasi-Centrelink provider of upper-class welfare for the privileged.
No crowded foyers, no standing in line, the ATO is firmly established as the agency of choice for the ambitious and discerning welfare seeker. Humble Centrelink clients, by and large, need never apply.
Last year a leading economist, Saul Eslake, described the Australian tax system as “a giant Swiss cheese, riddled with holes” to allow the more prosperous to pay less tax. These holes he refers to are the tax exemptions, concessions, deductions, rebates, trusts and other preferential tax arrangements so beloved by high income earners and big corporations.
The value of the currency at the ATO and at Centrelink happens to be identical. A dollar of tax concession buys exactly the same amount of bread, or something more exotic, as the dollar of Centrelink payment.
And both dollars are alike in the sense that they are put in our pocket solely by Government fiat, an act of grace and favour.
Yet there are also some differences attached to these respective dollars. The Centrelink dollar will usually be spent for basic food and shelter in the face of privation. By contrast, the ATO dollar will often be saved as surplus or spent on excess.
Tell the tabloid press of your Centrelink dollar and you may be publicly vilified and shamed. Tell the same press of your ATO tax concession dollar and you may be featured as an astute money person.
Here are some of the Federal Government tax specials and forbearances that are crafted to delight the already economically fortunate:
- Superannuation Tax Concessions: In 2009-10, 57.7% of the total of $32 billion dollars in Government superannuation tax concessions flowed to the top 20% of income earners, while the bottom 10% were actually penalised for their superannuation savings. (Treasury 2013).
- Negative Gearing and Capital Gains Tax Concessions: A combined total of $7.7 billion of these tax concessions were delivered in 2011-12, with 50% of the negative gearing expenditures cornered by the top 20% of income households and an astonishing 73% of capital gains discounts gleaned by the top 10% of income households (NATSEM 2014).
- Discretionary Trusts: These long-standing legal vehicles shelter income and income-producing assets from normal taxation requirements.
- Fringe Benefits Tax concessions: These tax concessions are perennial favourites for providing expensive cars for private use by executives at bargain prices under novated leasing deals.
- Multinational and Local Corporate Tax Minimisation and Avoidance: The abundant opportunities for aggressive tax minimisation and avoidance by big corporations came under the public spotlight again in 2015 – this time via the Australian Senate Enquiry on corporate tax and the Report compiled by the Tax Justice Network, sponsored by the Uniting Church of Australia.
- Untaxed “Economic Rents” on Property Values: As Piketty notes, resistance by governments to consider broad-based land tax of the unearned windfalls on ownership always perpetuates high levels of economic inequality in societies.
And there is much more of this Government largesse, even outside the tax system itself. Take, for instance, the Government’s unlimited exemption on the value of the Principal Place of Residence in determining eligibility for the Age Pension.
So rest assured Australia. The privileged are never, ever forgotten when the Government formulates its list of financial considerations.
The fruits of government welfare come in many different guises; and certainly not only to the poor.
