Views on the bill
The committee received five submissions to the inquiry. Submitters
expressed opposing views on the bill. This chapter summarises the general views
on the bill, as well the views on the proposed amendments to personal income
tax, company income tax, and alcohol taxes.
General views on the bill
The Tax Justice Network Australia (TJN-Aus), an organisation which advocates
for fairer tax systems, strongly opposed the bill 'due to the great harm it would
cause to the well-being of millions of Australians'.
In its view, 'it would be reckless for any Australia government to contemplate
giving away half of its revenue'.
Mr Ryan Kennealy, a student from the University of Adelaide, did not
support the bill. He noted:
While I remain an advocate for lower taxes and a more
efficient tax system, the Lower Tax Bill 2018 does not seek to accomplish that
in a way that is consistent with the value of fairness. It presents more
challenges to government and society as a whole than solutions.
The EM notes that former Senator Leyonhjelm obtained costings from the
Parliamentary Budget Office for a range of measures to halve annual Commonwealth
Government spending, which could, in his view allow 'a near-halving of
Commonwealth Government taxation, while still allowing considerable improvement
in the Commonwealth Government's budget and balance sheet'.
Mr Kennealy expressed concern that the EM does not provide detail on the
spending cuts that would be necessary if the bill is passed, noting:
Senator Leyonhjelm has not provided in detail what programs
would have to be cut in order to compensate for this loss of revenue. These
proposals show that, even over the forward estimates, government spending would
have to be reduced to the equivalent of cutting the entire welfare budget three
times over. The Explanatory Memorandum states that the government should only
provide funding to 'non-excludable' services, such as defence and air quality
regulation. Senator Leyonhjelm must be clearer on exactly where funding would
need to be cut.
The Australian Taxpayers' Alliance (ATA), a taxpayers' advocacy group,
considered that 'unreasonably high taxes are a handbrake on economic growth,
prosperity and individual human flourishing'.
While the ATA supported the proposed tax cuts, it submitted that these cuts
'should be 'phased in' alongside cuts to government spending in order to ensure
that the tax cuts do not cause an increase in public debt to be shouldered by
Personal income tax
TJN-Aus cautioned against the measures proposed in the bill relating to
personal income tax. It was concerned about the potential negative consequences
of establishing a flat personal income tax rate of 20 per cent and amending the
tax free threshold to $40,000, particularly as this measure 'would contribute
substantially to the growth in inequality in Australia'.
Conversely, the ATA believed that the bill's proposal to raising the
income tax threshold and implementing a flat income tax would:
...deliver immense benefits by increasing the wealth of
Australian workers and increasing the incentives for promotions and career
progression. It will also deliver benefits in the form of increased consumption
which will stimulate the economy as individuals are able to spend more of what
Company income tax
TJN-Aus described the measures in the bill relating to company tax rates
as a plan to 'to give away billions in revenue to multinational corporations by
lowering the corporate income tax rate to 20%'. TJN-Aus believed the measures
Also increase inequality in Australia, with inequality being
increasingly shown to be a factor in undermining social cohesion in OECD
Make our tax system less progressive, meaning the wealthier
Australians will contribute less to the provisions of services and law
enforcement for a good society in Australia;
Deliver more money to foreign shareholders, who do not pay tax in
Reduce revenue for services and law enforcement in Australia.
The ATA supported the proposed reduction of Australia's company tax rate
to 20 per cent in order to ensure that Australia keeps up with the rest of the
world. It proposed phasing in the tax cut over time 'in order to reduce the
windfall gain to foreign investors from their existing investments here, while
acting as a signal for future investment in Australia'.
TJN-Aus maintained that alcohol taxation 'is the most cost-effective
measure to reduce alcohol harms'. As such, it expressed concern that the
proposed measures in the bill to 'abolish alcohol duties and the Wine
Equalisation Tax would increase the level of harm caused by alcohol consumption
in Australia, driving up alcohol related assaults, diseases caused by alcohol
and the prevalence and intensity of family violence'.
Conversely, the ATA informed the committee that:
ATA believes that so-called 'sin taxes' on products such as
alcohol should be repealed or significantly reduced. Not only do these taxes
distort the market while penalising mainly the majority of consumers who drink
responsibly, they also represent the overreach of government whereby the
relative price inelasticity of these products is used as justification to
exploit ordinary consumers for the purpose of raising government revenue.
The ATA also raised concerns that the Wine Equalisation Tax inhibits
craft and boutique producers from entering the market and growing their
business above a size in which a tax concession presently exists. In relation
to craft brewers, it also noted that:
Brewers pay less excise for beer sold in vessels larger than
48L and beer sold in vessels (kegs and bottles) less than 48L attract a higher
rate of excise. This effectively punishes smaller, craft brewers and makes it
even more difficult for them to compete with their large, established,
On 13 February 2019, the government introduced the Treasury Laws
Amendment (2019 Measures No. 1) Bill 2019 and the Excise Tariff Amendment (Supporting
Craft Brewers) Bill 2019, which includes measures to address this issue by
extending concessional excise duty rates to brewers that supply draught beer in
kegs or other containers that have a capacity of 8 litres or greater.
The committee supports the delivery of personal income tax relief to
encourage and reward working Australians and notes the government's
announcement that it would fast-track tax relief for around 3.3 million small
and medium-sized businesses.
The committee notes the need to balance the delivery of essential
services without resorting to growth-inhibiting higher taxes. The committee
does not consider the bill achieves this balance, as the proposed measures in
the bill nearly halve Commonwealth tax revenue without providing any detail of
the programs that would need to be cut in order to compensate for this loss of
The committee notes that the sponsor of the bill, former Senator David
Leyonhjelm, resigned from the Senate on 1 March 2019.
The committee recommends that the Senate not pass the bill.
Senator Jane Hume
Navigation: Previous Page | Contents | Next Page