Labor proposed $200 Billion worth of new taxes.
That’s a staggering amount – almost unfathomable
With the many new taxes and policy changes that Labor will implement if they win the May 18th Federal Election, they will tax your income, your home, your superannuation and your savings.
Many of the changes are difficult to understand and the impact on us is hard to determine.
The numbers are so large they are almost meaningless unless of course they are explained, so I’ll try and break them down.
$200 Billion in new taxes
Putting this into perspective this sum is more than the whole tax the government receives from individuals and double what it receives from company tax.
Such a massive and immediate drain on the economy must put pressure on both employment levels and wage rises.
This tax impost is equivalent to increasing taxes on every family by over $1800 per year
Loss of negative Gearing benefits
This has received a lot of publicity recently and it has been revealed that Labor has made a number of incorrect basic assumptions in formulating the potential benefits of the proposed taxes.
Plus they seem to have forgotten how ordinary mum and dad investors are providing housing for renters.
Some other things they seem to have forgotten include:
- The Government spends about the same on Public Housing ($4.7 billion) as they do on Recreation and Culture and the trend is less and less each year. Someone (you and me) has to take up the slack.
- It is said that the loss of negative gearing will benefit the government by $3 billion per year (an this figure now seems to be significantly overstated); but p investors spend $44 billion per year to own and maintain these properties.
- In most businesses the initial years start off with losses and this is the same for property investors. The benefit of negative gearing is what all investors and business owners receive when they spend more than they receive to build up a business which will become profitable and pay tax.
- There are 400,000 public houses in Australia compared to over 3 million properties owned by investors. If 10% of investors leave the market, then the Government will need to step in and spend more than the tax saving from disallowing negative gearing.
- Loss of this tax benefit to investors could add over $5,000 to a property investor’s cash flow which would require them to increase rents on average by over $100 per week.
- Just talking about this policy has reduced house prices due to the uncertainty. So who knows what eventually implementing the actual policy will do. The policy by Labour is specifically designed to help reduce house prices (your home) so that 10% of housing buyers, being first home buyers can afford to get into the market. The Labour Government is punishing 90% of home owners so 10% first home buyers may be better off.
Labour wants 50% of all cars to be electric within 10 years.
Assuming many cars will not be suitable for electric drive i.e. farm vehicles, long distance driving, utes and 4-wheel drive cars then over 75% of passenger cars will be taxed if not electric.
The proposed tax on petrol cars will be over $2,000 per year as they emit more than the 105 grams of carbon.
A 50% target for electric cars will reduce government excise taxes on fuel by $5.5 billion per year.
This loss of revenue will need to be made up from somehow – maybe by things like road levies, poorer road maintenance, no black spot remedial work, higher registration and insurance costs to name a few. This impost will add over $5,500 per year to every hard-working Australian family.
The loss of the cash back on Franking Credits
Australian who own shares in public companies have their individual tax on dividends pre paid by the company.
When these share owner receives their dividend (their share of the profits in the companies they partly own), they have the value of the prepaid taxes (paid by the company) taken into account.
If the shareholder’s tax rate is higher than the tax taken by the company (and paid to the government) they will pay a top up tax.
If below they get a refund.
It is proposed to take this refund away.
This is the same as denying you a tax refund if you overpay your PAYG on wages.
The Labor Party say this will only impact a small portion of Australians but this is false.
Existing retirees are immediately impacted as this cash refund was money they used to live on.
Everyone with super will also be impacted as the non-refund will reduce the cash within super which will mean less investments and therefore less money in retirement.
Retirees will see the impact immediately, everyone else will not see it until retirement.
This is a tax by deceit and Labor is hoping what you cannot see you will not complain about.
Estimates range from an annual loss of about $500 to $2000 for people still in accumulation.
Imagine what this annual loss adds up to over 20 or 30 years.
A similar impact will occur to people who invest in the share market outside of super.
But there’s more…
Recent Labor announcements, supported by Treasury, show additional taxes and the burden on hard working Australians amount to $387 billion.
If they come to power Labor will be the highest taxing Government in Australian history where taxes represent 25.9% of our GDP compared to a self-imposed previous limit of 23.9%.
This 2% growth represents an additional $35,000 per Australian Household (or over $15,000 per person) in additional taxes, imposts or reduced business activity.
Labour propose to tax an additional:
- $57 billion to retirees
- $31 billion on property investors
- $30 billion on businesses using trusts
- $34 billion on higher superannuation taxes
- $5 billion from halving the capital gains tax discount
- $2 billion by limiting what you can spend on accounting and tax services.
- Plus, many more
The Greens and the ACTU would like the introduction of an inheritance tax.
What’s left? How long before your family home will be taxed?
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