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ACOSS warns government of the real danger of income tax cuts

Australia’s advocacy body raises concern over what tax cuts could mean for the community sector

Australia’s national advocacy body has voiced serious concern over what the proposed tax cuts could mean for the future of community services.

The Australian Council of Social Services (ACOSS) said the Coalition’s decision to distribute $140 billion of public revenue in a single day would have an impact on educational and health services on top of existing underfunded essential services.

ACOSS CEO, Dr Cassandra Goldie, said: “This income tax package comes at a time when our Budget is in a much worse position than in 2007 and the gaps in essential services such as aged care, health and Newstart are wider than they were in 2007.

“The 2018 income tax package will mean ongoing cuts to health, education and social security for those who need them most – people in the lowest 40 per cent of households who are unlikely to benefit from tax cuts.”

Goldie said the 2018 income tax package is “built on shaky budget projections” with few experts willing to endorse the cuts. ACOSS is calling on the Coalition and Labor to revaluate the decision to lock in “unaffordable” cuts for the next six years.

The advocacy body reflects on past governance, suggesting that locking in tax cuts seven years in advance is the wrong approach. Goldie accuses the government of taking “a stab in the dark” which would result in a reckless tax cut auction.

In 2007, the Howard government budgeted $34 billion in income tax over four years, which Labor approved of. The Rudd government then implemented almost all the cuts before facing an unexpected economic downturn in the Global Financial Crisis.

Instead of implementing a bi-partisan commitment that would see the Budget return to surplus, the Abbott government slashed spending on social security payments for the poorest in the community and funding for essential services.

“Fast forward a decade to 2018, and the Coalition government has announced a very similar $140 billion package of personal income tax cuts, beginning with middle income earners and leading to more costly cuts for those in the highest incomes.”

Goldie said that low and middle income-earners are likely to be handed a “raw deal” and that to truly compensate taxpayers for bracket creep, “governments need to know how different groups are affected by it.”

“When more people locked out of paid work and families on low pay fall into poverty, and people on modest incomes have to leave our cities because they can’t afford housing, people will recall that this was when the major parties made the wrong call.”

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