Bill Shorten and Labor’s War on Growth on our $1.6 trillion transitioning economy will hit Australians with $100 billion in higher taxes, limiting economic growth and leaving Australians wondering just what Labor will tax next to pay for their out of control spending.
Yesterday’s March National Accounts showed real GDP growing by 1.1 per cent in the March quarter and by a strong 3.1 per cent through the year.
While these are encouraging signs our economy is successfully transitioning, the data also highlighted some vulnerabilities.
The sensitive stage in our economic transition is why the Coalition Government has a national economic plan that supports hardworking Australians to build confidence and economic activity.
By contrast, Labor’s rush to impose an additional $100 billion in taxes amounts to a declaration of war on growth in our economy and undermines everything Australians are working hard for, putting their jobs and the businesses that employ them at risk.
Labor’s higher taxes will be toxic for Australia’s transitioning economy and put at risk everything that is being achieved.
Labor’s $100 billion in higher taxes are not designed to reduce the deficit but only to chase higher and higher levels of spending, no matter the cost to economic growth.
The result will be higher taxes, higher deficits and higher debt – that is not a plan for jobs and growth.
Labor’s war on business and growth will shut out incentive, enterprise and effort at a time when those attributes should be encouraged to lift productivity.
Labor’s tax on small business –
Under Labor Australian businesses will pay higher, uncompetitive tax rates. Around 100,000 businesses with a turnover threshold between $2 million and $10 million and employing almost 2.2 million people will be worse off.
These businesses, who Bill Shorten dismisses as multinationals, pay about $6.8 billion in tax per year. They employ an average of 22 Australians each – they are not multinationals.
Labor wants them to payer higher taxes, and deny them access to investment incentives, including the $20,000 instant asset write off and the pooled depreciation provisions.
Over the next four years the jobs of more than 4.9 million Australians or half of all employees of companies in Australia will be supported by our lower tax rate.
We need to back these enterprises with tax relief to help them prosper, employ more Australians and drive our economic transition.
Labor’s higher taxes on investment –
Labor's 50 per cent increase in Capital Gains Tax will punish investment and put Australia’s successful economic transition at risk.
It would also give Australia the second highest personal capital gains tax rate amongst comparable countries.
Under Labor, we would risk losing innovative Australians to other countries where taxes are lower and the return on investment is higher.
Labor's thin capitalisation proposal will reduce foreign investment and cost jobs.
The Department of Treasury examined the proposal and said there was no way to quantify it and advised against adopting the policy, warning it would affect investment into Australia, particularly in crucial areas like infrastructure.
By contrast the Turnbull Government will ensure that multinationals pay their fair share of tax, with new tax measures that raise twice the revenue of Labor’s ill-considered proposals.
Labor’s higher taxes on income –
Labor is permanently increasing the personal income tax burden. On Labor’s own numbers, this will increase the personal income tax burden by $16 billion over the next decade.
The Secretary of the Treasury has previously provided formal advice to Government that this will damage economic growth.
Labor is also opposing tax incentives for small business to invest and expand by hiring more Australians, including unincorporated small businesses who will be denied a tax cut by Labor.
Labor’s higher taxes on housing –
Labor's ill-considered negative gearing changes will increase rents, undermine the value of the family home and hurt mum and dad investors.
The majority of Australians who use negative gearing are middle income Australians – around two thirds of those who use negative gearing for property investment, have taxable income of less than $80,000.
Tens of thousands of electricians, teachers and nurses use negative gearing.
The average middle income earner claims three times as much in net rental losses as the average high income earner, as a proportion of their income.
Seventy per cent of property investors have just one investment property and 20 per cent have two.
Most of these middle income earners are investing in established housing, which Labor wants to ban.
Labor wants to penalise mum and dad investors just trying to build a future for their families.
Their proposal will also see the wealthy continuing to negatively gear existing housing stock by offsetting rental losses against their investment income, gaining a massive tax advantage over low and middle income Australians.
Labor’s higher taxes on electricity –
Labor's new carbon tax would increase wholesale electricity prices rise by 78 per cent and cost families $4,900 in income by 2030.
And that's based off Labor's own modelling of a similar policy when last they were in government.
But it would be even worse in a Labor-Greens alliance.
Labor’s great big new carbon tax would have a devastating impact on our economy, jobs and incomes while power prices would skyrocket for all Australians.
What will Labor tax next?
When it comes to taxing and spending, Bill Shorten and Labor have only just warmed up.
And it will just get worse in a Labor/Greens alliance in government, with Labor presented a multi-billion spending list and taxpayers left footing the bill through higher taxes, debt and deficit.
Labor’s irresponsible policies are a war on Australia’s economic growth.