The ultra-wealthy have exploited Australia's tax system for too long. It's time to ensure everyone pays their fair share
Australia's current tax system is exploited by big business and the ultra-wealthy, entrenching intergenerational inequality and placing affordable housing out of young workers' reach, which threatens the services and infrastructure we all rely on.
We need a minimum 25% tax on gas export revenues, a minimum 25% tax for trust funds and individuals earning more than $1m, and a one investment property limit for negative gearing and the capital gains tax discount benefits, with the grandfathering of current arrangements for five years. These changes have a simple intention: to make sure everyone pays their fair share, so productivity gains flow across society fairly.
These proposed reforms would help restore fairness and opportunity for young Australians to get ahead in their lives.
For the past 25 years, productivity increases have gone back into company profits, shareholder dividends, share buybacks and executive bonuses. Working people know that every time they check their bank accounts, there is no 'direct debit system' where the extra profits generated by increased productivity are automatically shared with them.
Australia is a rich country but, for decades, as the 'economic pie' has got bigger, corporations have not just taken their own bigger slice, they have been eating into ours. The way to stop this is to make sure workers have strong rights at work to get the pay rises they deserve and to make sure our tax system ensures everyone – not just the ordinary worker – pays their fair share of taxes.
There are flaws in our tax system that disadvantage younger Australians and reinforce inter-generational inequity. Just 1% of taxpayers own 25% of investment properties, fuelling house prices, skyrocketing rents and putting home ownership out of reach. House prices have gone up at twice the rate of wages in the last 25 years. The result? Workers can no longer afford to live near their jobs, while young people face high rents and are priced out of buying homes. It is true that housing supply needs to increase, but the tax system is adding to the affordability problem and that needs to change.
The loudest complaints will come from those who have gamed the system to accumulate enormous economic and political power. Australia's economy is dominated by an artificially inflated property market, in addition a small number of large companies in a small number of industries.
Claims that working people will automatically be better off if productivity increases are wrong. Dr Jim Stanford's recent paper on productivity shows that if real wages had grown at the same rate of productivity since 2000, average wages would be 18% – or $350 per week – higher than they are now.
What you won't hear from big business is the real reason productivity growth in Australia has been slow: they have prioritised distributing profits rather than investing in capital, research and people.
Workers' rights are not 'red tape', they are the way we get pay rises and limits on working hours. They are essential to workers benefiting from the productivity gains our hard work creates. If we take them away, workers will get even less.
Our proposed reforms are targeted and achievable. These are simple changes that close loopholes and restore balance, because we recognise that the problem isn't everyday investors who are looking to build a nest egg with a housing investment, the problem is that the current tax system rewards investing in housing as an asset class so the richest mega-investors are accumulating a large number of properties, tying up capital that could be invested in things that contribute to productivity growth and forcing property prices up beyond what any ordinary working person can afford.
Working people pay their fair share of tax, we just want everyone else to as well. Ninety-one people with an income over $1m paid no income tax in 2022-23. Not one cent! When the very wealthy pay less tax than a bus driver or an aged care worker, something is very wrong. Trust funds have also become tax minimisation schemes for rich people, and mega-profitable resource companies are also getting away with paying little or no corporate tax. Our proposals are about ensuring the economy works for those who actually keep it running: working people.
Sally McManus is a trade unionist and political activist who has served as the secretary of the Australia Council of Trade Unions since 2017
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