18 June 2018

Tax cuts hurt everyone except the very wealthy



A briefing paper on proposed income tax cuts publicly released today highlights how the cuts will increase inequality and impede future governments’ ability to fund essential services and infrastructure.

The briefing dispels a number of misleading claims that have been made to justify the tax cuts and highlights the long-term social and economic costs.

“In a context of growing inequality and ongoing gaps in services and benefits, the Government should be growing revenue to fund public services and infrastructure, not embarking on reckless tax cuts that punch a massive hole in government revenue and are skewed towards high income earners,” said Dr John Falzon, CEO of the St Vincent de Paul Society National Council.

“Tax cuts now will be paid for by all of us through future cuts to services, higher user charges and longer waiting lists.

“But the biggest losers will be the most economically disadvantaged: those who do not have any income tax to cut and who will bear the brunt of cuts to essential services and benefits,” said Dr Falzon.

The briefing examines evidence showing that the tax cuts will widen inequalities and compound gender disparities in income. It also considers current budgetary pressures and the implications of additional funding cuts arising from the tax plan:

The lack of adequate funding to public services such as healthcare and education is already resulting in greater out-of-pocket costs for households, with increased user fees and a trend toward privatising services. More tax cuts will lead to further funding cuts, increased fees and more privatisation – putting more pressure on living standards and household costs, and hurting most those who have the least. (The Briefing, p.11)

“Our taxation system should be a means of redistribution for the many not reward for the few.

“It is the role of government to reduce inequality, but the proposed tax cuts will clearly ramp inequality up,” said Dr Falzon.

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