Labor's $446b tax hit to 'top end of town'
Labor will deliver a $446 billion tax hit to retired shareholders, property investors, superannuation accounts and high-income earners in order to fund a pay rise to child care workers, dental for pensioners and the highest surplus in Australian history.
Shadow treasurer Chris Bowen said the Opposition's policies would reform Australia's "two-class tax system", redistributing billions of dollars from the "top end of town" to "normal players" while rapidly increasing the return to a surplus of 1 per cent of gross domestic product.
The costings, released on Friday morning to mark the final stretch of the election campaign, show the $154 billion in tax raised will be delivered to those on lower incomes and to fund education and subsidies for cancer treatment, on top of a reversal of almost $300 billion in tax cuts already legislated.
Mr Bowen said 96 per cent of Australians would not be impacted by the tax changes.
Labor has emphasised targeting multinational tax avoidance in its election pitch, but the costings show the measure will raise a fraction of the funding to come from local trusts and superannuation accounts for high-income earners.
Multinationals are expected to pay between $600 million and $800 million a year extra in tax under Labor, compared to the $2.2 billion raised from discretionary trusts and $2.6 billion raised from lifting the concessional superannuation rate above $200,000 a year from 15 per cent to 30 per cent.
Labor's finance spokesman, Jim Chalmers, attacked Prime Minister Scott Morrison for an economy that favoured "multimillionaires and multinationals over workers and pensioners".
"It is a massive transfer of billions of dollars out of the pockets of ordinary working people to benefit a tiny sliver of the Australian population and if we are serious about getting the budget into a sustainable condition, we need to take those difficult decisions and deal with those issues," he said.
Mr Morrison has accused Labor of adopting policies that would "smash the economy" through higher taxes.
The costings confirm Labor will reverse $285 billion of personal income tax cuts already legislated, meaning workers earning more than $90,000 a year will pay an extra $1000 a year in tax, while those on more than $200,000 will pay an extra $11,000 a year.
Labor will need to negotiate with a potentially fractious Senate to kill the already legislated tax cuts if elected.
The rejection of the cuts means Labor's tax-to-GDP ratio will be higher than the Coalition's, reaching 24.3 per cent compared with 23.9 per cent.
Mr Bowen said it would be unrealistic not to assume tax relief at a certain level.
Labor has a $200 billion reserve fund from which it is likely to deliver further tax cuts after 2022 for both individuals and companies, but will continue to favour low- to middle-income earners.
"We have assumed that under a Shorten Labor government that we will provide tax relief when the tax GDP ratio hits 23.4 per cent, which is equivalent to that under the Howard government," Mr Bowen said.
The costings show Labor's policy to boost the wages of childcare workers by 20 per cent will cost $2 billion in the final year of the policy, leaving taxpayers facing the prospect of a subsidy of that size in perpetuity or childcare centres facing a sudden $2 billion-a-year wages bill.
Labor has refused to confirm what it will do after the 10-year period.
The costings show banning future negative gearing for established properties and halving capital gains tax concessions will save the budget $32 billion over the next decade, while changes to franking credit refundability will add $6 billion a year by 2025 and $58 billion over the decade.
More to come