Subjects: Tax reform, tax evasion.
VAN ONSELEN: More now on our top story today – the Government’s proposal to allow states and the territories to levy income taxes. I spoke earlier with the Shadow Infrastructure spokesperson for the Labor Party, Anthony Albanese.
Anthony Albanese thanks very for joining us. What do you make of this idea of income-taxing powers perhaps being handed back to the states that the government has revealed?
ALBANESE: Well, this is a government without an economic agenda but with nothing off limits re thought bubbles. We have had a national system of income taxation since the 1940s. The idea that we would make the tax system more complex by introducing a new tax is quite bizarre.
VAN ONSELEN: To play Devil’s Advocate to that though, the United States does a version of this. They are a very strong Federation. Some of the state premiers have actually been calling for income-taxing powers and they do have a problem funding health and education going forwards. It is more complicated, but is it at least something worth considering?
ALBANESE: Well, you know state premiers want more money and that’s because they want to provide services in education and health and the Turnbull and Abbott governments have cut funding for education and health. Peter, I have sat in Question Time for the last two and a half years where minister after minister has denied that there are any cuts to education and health. Well, Prime Minister Turnbull has now given that up, has conceded that there are these massive cuts to health. He’s offered to put a little bit back, but not all of the cuts that were there over a 10-year period and he has offered nothing with regard to education in spite of the fact that there was a very clear commitment on every polling booth at the last election that every school would get the same amount of funding no matter who won the election. Well, this is now a desperate government in search of an agenda. What they should do is actually do what they said they would do – not have cuts to education – and health and they could do that by restoring the funding that was there in the Budget.
VAN ONSELEN: So can I just clarify? From your perspective, the Labor Party just rejects out of hand the proposition of proposition of even looking at income taxing powers for the states or have you got an open mind to it even if you are cynical about why the Government going down this path?
ALBANESE: Well I tell you what I’ve got, I want to those people who should be paying tax to pay tax and the Government could start, instead of hitting ordinary working people who are already paying more than their fair share of tax because people are avoiding tax, because you have people earning millions of dollars literally employing accountants and lawyers to get around the tax system. You have the rorts that are taking place in terms of high-income earners using superannuation to avoid their obligations. You have multi-national corporations not paying their fair share of tax. All of these measures could be considered by the government before you start looking at a new tax on ordinary working people to be hit at the state level in addition to the share of taxation they are paying already at the federal level. Why is it that this government looks at hurting ordinary working Australians whenever they look at economic policy, instead of having a progressive attitude of maybe those people who aren’t paying their fair share should be kicking the can?
VAN ONSELEN: Vertical fiscal imbalance, as worthy as that it is, is something that has been a problem for the states for a very long time; they do most of the spending, the Commonwealth does most of the revenue raising. But hand in glove with the proposition is this whole notion of horizontal fiscal equalisation to ensure I guess that unlike the United States our states are relatively similarly prosperous between them all. Is there a worry there do you think that if you have income taxing powers at state level that that equalisation across states could actually be impacted on?
ALBANESE: Of course it would be Peter. The complexity of introducing different income tax systems at the state level, you could end up with the equivalent of the railway gauges problem, the problems with a lack of a national system across transport regulators that I had to deal with as the minister. What we need as an economy is a more national approach, is more uniformity so that the accidents of history that are state boundaries don’t determine what services people get and how prosperous people are. Now, if you go down the road of having different income tax systems for state governments, you raise a whole range of issues. We’ve seen the absurdities as well when states will compete for events and offer different levels of subsidies so that the big losers are taxpayers in the respective states. We need to move away from this and the idea that the way that you fix federation is to give states income tax powers is I think quite backward-looking and hasn’t been thought through. I don’t think it’s a serious proposition. I suspect that it’s been raised to hide the fact that Malcolm Turnbull isn’t restoring or proposing to restore the cuts that were made to health and to education and he clearly is on the back foot, particularly over education where we’ve got the 10-year plan to give every child an opportunity to make the best of themselves in terms of their lives through education funding based upon need. I mean, this is an issue in terms of school funding that has been a scar on the political landscape for decades. It led to conflict in the Labor Party in the 1960s. It’s led to argy bargy over too long. Now, David Gonski established a process that would have ended that conflict for ever. All sides signed up to it and then the Government, after it was elected, walked away from it. Now I suspect that this is just a distraction. I can’t believe that serious economic reform involves introducing new taxes that duplicate existing taxes at the Federal level but raise the potential for different tax systems across the states affecting average earners. What are we going to have now? Differentiated GST rates depending upon where people live?
VAN ONSELEN: Well, let me ask you though, let me just move on. What we are going to have if Labor wins is differentiated classifications in relations to housing with what can negatively geared and what can’t be. My understanding is that this was a very divisive issue when Shadow Cabinet considered it before settling on the policy, both in terms of the negative gearing side as well as the reductions in the capital gains tax concessions. Does it concern you that Shadow Cabinet, whilst it ultimately settled on the policy, it has clearly leaked that here were disagreements internally.
ALBANESE: Well that’s simply not right, Peter.
VAN ONSELEN Not at all?
ALBANESE: The fact is that we’ve been out there for a very long period of time saying, foreshadowing that we were considering changes to negative gearing and to look at …
VAN ONSELEN: But I’m talking about the policy that was settled on, Mr Albanese. I am led to believe there was a strong debate within Shadow Cabinet with a number of Shadow Cabinet ministers concerned about the policy script that Labor ultimately adopted.
ALBANESE: Well, there is strong support for this policy. It is not something that has divided the Labor Party. Every single member of the Shadow Cabinet, like every Member of Parliament, and indeed might I say, every ALP member who is in touch with their
local communities, knows that one of the big discussions that takes place on the sidelines at the football field where kids are playing sport or at the P&C, or at the local pub, is: I’ve got a house. How can my child or my grandchildren ever get into housing? And that is the issue that needs to be confronted. The Labor Party has come up with a comprehensive plan on housing affordability. There’s more to be released down the track in terms of policies that have been settled upon, but there is a vacuum on the other side of politics and what is extraordinary is that we’ve had this policy out there now for months and what we have from the opposition is still sniping and no tax policy, no economic policy. In the last 24 hours we have this idea of state-based income taxes and they have the hide to talk about new taxes and who is in favour of them. Well, we know who is in favour of new regressive taxes and they wanted to have the GST to 15 percent. They couldn’t get that through so now they are talking about, rather than fix some of the evasion and avoidance that’s taking place within the existing tax system, they want to hurt ordinary working Australians.
VAN ONSELEN: Mr Albanese we’ll have to leave it there. We appreciate you time on News Day. Thanks for your company.
ALBANESE: Great to be with you, I am off to Newcastle.