Young Social Entrepreneurs
The Chronicle, 1 August 2017
One of the most inspiring things that I do as a local MP is host breakfast for young social entrepreneurs.
Sunny Forsyth, Neha Pathak and Tristan Skinner work with Abundant Water, which distributes water filters in developing nations such as East Timor. Through Raize the Roof, Lincoln and Danielle Dal Cortivo are supporting seriously ill children in the ACT and orphaned children in Botswana.
Hannah Wandel leads Country to Canberra, providing mentoring support to young women in rural Australia. Francesca Maclean started Fifty50 to promote gender equity in science and engineering. Maddeline Mooney is exploring the need for a new body that looks at mental wellbeing in the deaf community.Read more
ANDREW LEIGH, SHADOW ASSISTANT TREASURER
ED HUSIC, SHADOW MINISTER FOR THE DIGITAL ECONOMY
ERROR 404: RESPONSIBLE GOVERNMENT NOT FOUND
Another day, another article on IT outages at the Australian Tax Office.
The ATO is trying as hard as it can, but it’s been left struggling thanks to staffing cuts by the Coalition. Just last week we read reports that the Turnbull Government is planning to continue with its cuts over the next three years, climbing to almost $30 million in cutbacks.
Australians deserve better than this Pushme Pullyu of a policy. Labor has repeatedly called for an investigation into these interruptions, but Malcolm Turnbull has team have done nothing to reassure the public. He needs to step up and ensure the Tax Office has the support it needs to do its job.
Labor has constantly asked the agency designed to help digital transformation is doing to help the ATO. They've always said nothing. Now that they have been shamed into acting, the test is whether they will improve things.
WEDNESDAY, 2 AUGUST 2017
MONDAY, 31 JULY 2017
SUBJECTS: Labor’s plan for a fairer tax system for all Australians.
RAFAEL EPSTEIN: Andrew Leigh is the Shadow Assistant Treasurer, he is part of Bill Shorten's team. Good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Raf, how are you?
EPSTEIN: How many trusts will pay more tax because of this?
LEIGH: Something in the order of around 300,000 trusts, affecting only around 2 per cent of taxpayers. This is dealing with the issue of income-splitting, which is a trick by which high income professionals have been able to use multiple tax-free thresholds. Where a regular wage earner gets to have their one tax-free threshold, there has been increasingly this practice of income-splitting which has meant that people have been able to use adult children and sometimes the tax-free thresholds of their parents to pay less tax than regular PAYG taxpayers.
EPSTEIN: I guess the obvious question is how do you know you're hitting income splitters and not genuine small businesses?
LEIGH: Because that's exactly the way the policy is designed, Raf. There has been some speculation around taxing trusts as companies. We looked at that, but we thought that that would have exactly the sort of unintended results that you're talking about there. What we've done is build on work that John Howard put in place in 1980 as Treasurer. He changed the rules at that stage and so that for people trying to distribute money to children, those children would then pay the top marginal tax rate. We haven't said that people will pay the top marginal tax rates for distributions to mature age beneficiaries, we've said instead it would be a 30 per cent tax rate. But it does go to exactly that same issue of income-splitting.
EPSTEIN: How do you know you're not going to hit people? There might be someone distributing to people in the trust and they’re not at that 30 per cent, they're a genuine part of a small business you might hit them?
LEIGH: Well Raf, if you're an employee of a small business then the regular arrangements continue, you're unaffected by this. But if passive income is being distributed through a discretionary trust, then you pay a 30 per cent tax rate on that. If you look at who is getting the benefit of trusts, they're heavily skewed to the top end, the richest fifth of Australians have almost all of the wealth that is held in discretionary trusts. This is about making sure that our system is fair, that you don't have what Bill Shorten has correctly called a two class tax system in which one set of taxpayers simply have a single tax-free threshold while another set of taxpayers get to make use of the tax-free thresholds of their family members.Read more
BILL SHORTEN, LEADER OF THE OPPOSITION
CHRIS BOWEN, SHADOW TREASURER
ANDREW LEIGH, SHADOW ASSISTANT TREASURER
A FAIRER TAX SYSTEM FOR ALL AUSTRALIANS
Today Labor is announcing new plans to improve our tax system so that it is fair for all Australians.
A Shorten Labor Government will introduce a standard minimum 30 per cent tax rate for discretionary trust distributions to mature beneficiaries (people over the age of 18).
Labor’s policy will tackle the use of income splitting to minimse tax – making the tax system fairer and improving the budget bottom line.
Australia currently has a two-class tax system. While most people pay the tax that they owe through normal PAYG arrangements, the system includes generous subsidies and loopholes which allow some wealthier people to minimise their tax.
Wealthy individuals are much more likely to benefit from a trust than low and middle income earners. The average amount of money held in private trusts by the wealthiest 20 per cent of households is $123,000, while for the next wealthiest quintile it is just $4,000.
Individuals and businesses use trusts for a range of legitimate reasons, such as asset protection and business succession. But in some cases, trusts are used solely for tax minimisation.
Discretionary trusts allow for trust income to be distributed on an entirely discretionary basis. This means distributions can be artificially split between different people in lower tax brackets so that the tax paid on the overall amount is much less than it would otherwise be.
While artificial income splitting is completely legal, that doesn’t mean it is fair.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER
ED HUSIC, SHADOW MINISTER FOR THE DIGITAL ECONOMY
CUTS NO SOLUTION TO TAX OFFICE OUTAGES
The Turnbull Government is planning to keep cutting the Tax Office at a time when they are struggling to stay online.
Despite repeated outages, there are reports today that the Turnbull Government is planning to continue with its cuts over the next three years, climbing to almost $30 million.
This is madness.
The Turnbull Government needs to support our public servants and come clean on the rolling outages, which have disrupted so many Australians’ tax time.
Labor has repeatedly called for an investigation into these interruptions, but Malcolm Turnbull has team have done nothing to reassure the public.
The Turnbull Government hasn’t explained how the current staff will be able to cope with the on-going disruption of outages during tax time 2017 – not to mention the disruption to tax agents and the general public.Read more
MIND THE INEQUALITY GAP, MR MORRISON
The Reserve Bank Governor has confirmed what many Australians already know – that inequality is indeed increasing.
Dr Lowe told an event organised by the Australian Business Economists that inequality "grew quite a lot in the 1980s and the 1990s and it has risen a little bit just recently… It has become more pronounced in the past few years because of the of the rise in assets prices and people that own those assets have seen their wealth go up".
The facts tell a clear story. Since the mid-1970s, earnings have risen three times as fast for the top tenth of Australians as for the bottom tenth. The labour share in the economy is at a four-decade low, and the home ownership rate is at a six-decade low.
Labor will tackle inequality through fair tax reforms, needs-based school funding and defending universal health care. The Turnbull Government prefers to prevaricate and procrastinate.
Since they came to office, the Abbott and Turnbull Governments have proposed slowing the rate of pension increases, cutting the income support bonus, and removing consumer protections from the financial advice market.
They have reduced the pay of the men and women who clean their offices, and just delivered a $16,400 tax cut to those with million-dollar incomes.
As the saying goes, when you’re in a hole, stop digging. Scott Morrison needs to admit that his claims about falling inequality are bunkum, and join the constructive conversation about building a more equal Australia.
WEDNESDAY, 26 JULY 2017
Why Scott Morrison isn't entitled to his own facts on inequality in Australia
Business Insider, 26 July 2017
“You are entitled to your own opinion, but you are not entitled to your own facts”, the great American professor-turned-senator Daniel Patrick Moynihan used to enjoy saying to opponents.
I thought of Moynihan’s words this week when Scott Morrison claimed that inequality has “actually got better”. From a twitter troll, the claim might be laughed off. But when the Treasurer of Australia is making up the numbers, it’s nothing to chuckle about.
Since 1975, the Australian Bureau of Statistics has collected data on earnings inequality. Over this period, real wages have grown by 72% for the top tenth, but just 23% for the bottom tenth. Put another way, the top tenth of earners earned twice as much as the bottom tenth in 1975, but by 2014 they earned nearly three times as much. If low-wage earners had enjoyed the same percentage gains as the highest paid, they would be $16,000 a year better off.
Across the economy today, plenty of workers are seeing their pay packets grow more slowly than consumer prices. Many Australians are today suffering a real wage cut. As Per Capita’s David Hetherington has pointed out, the labour income share in the economy has fallen from 75% in 1975 to 60% today. Fat profits – skinny paychecks.
But earnings aren’t the only measure of inequality. By contrast, Scott Morrison tells us that his favourite metric is the gini coefficient for household income. So let’s see what that measure says. Writing in the latest issue of Australian Quarterly, inequality expert Peter Whiteford shows that household income inequality – after taxes and transfers – became much more unequal.
Whiteford shows that the gini in 1981-82 was 0.27, but by 2013-14 had risen to either 0.30 or 0.33, depending on whether you use the Melbourne Institute’s Household, Income and Labour Dynamics in Australia survey, or Australian Bureau of Statistics income surveys.
For a longer perspective, my own estimates of the pre-tax gini coefficient for men span the period 1942-2010.Read more
ABC MELBOURNE DRIVE
TUESDAY, 25 JULY 2017
Subjects: Trusts, inequality.
RAF EPSTEIN: Andrew Leigh joins us, he is the Shadow Assistant Treasurer. Good afternoon.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good afternoon, Raf. Great to be with you.
EPSTEIN: Are you doing stuff with trusts?
LEIGH: Raf, we’re looking at a range of different tax loopholes as you’d expect from a sensible Opposition that cares deeply about inequality. We’ve led the debate around superannuation tax concessions, brought policies to the last election closing loopholes on negative gearing and the capital gains tax discount and we’re looking across the board at ways to make our tax system fairer at a time when inequality has been rising for the last generation.
EPSTEIN: And I’m keen to talk about inequality and that was a fantastic bit of advocacy for the Labor Party-
LEIGH: [laughter] Thank you very much.
EPSTEIN: But not at all an answer to my question. Are you going to look at trusts in any way?
LEIGH: Raf, I’m on your show today to offer fresh perspectives rather than new announcements. Certainly, we’re not ruling out the issue of trusts. You’d be aware of the Australia Institute report that came out at the end of last week which suggested that around a fifth of national income was going through trusts and that half of the distributions from trusts were going to people with incomes over half a million dollars. Think about that for a moment. I mean, superannuation, negative gearing, capital gains tax discount – they all skew a bit to the top end, but half the distributions of trusts according, to the Australia Institute, are going to people with incomes over $500,000.
EPSTEIN: But people are still paying income tax. They’re still paying tax at their marginal tax rate, nothing – I mean, there’s nothing legally wrong with what they’re doing, is there?
LEIGH: No one is suggesting that people are behaving illegally at the moment. What’s important is that an Opposition that cares passionately about fairness, about maintaining the great egalitarian project that Australians prize is looking at each of these tax loopholes. Past tax reviews, including the Henry Review, have looked at this one and it needs to be part of the focus for an opposition that wants to make sure we don’t have what Bill Shorten has correctly called a ‘two class’ tax system.
EPSTEIN: And can I just ask you about the Henry Review – people may remember Ken Henry, former head of Treasury, did a big tax review for then Prime Minister Kevin Rudd. Why didn’t Labor take up that recommendation last time, do you know?
LEIGH: Well, we picked up a range of the recommendations out of that review.
EPSTEIN: I’m just wondering if you know why that one wasn’t followed.
LEIGH: Part of the challenge in government, Raf, is prioritising issues. So if you look at the previous big tax review, the 1975 Asprey tax review, that took the best part of a quarter century in order to implement. I think Ken Henry when he was doing his 2010 review didn’t envisage he was doing a review that would all be implemented in a single burst, but that he was laying a set of ideas that people would pick up in years to come. And we did many of the things recommended there – we tripled the tax free threshold, took a million people out of the burden of having to file a tax return every year for example.
EPSTEIN: So look, I assume you’re happy to have the government fulminating about the end of the world as we know it for farmers and small businesses. Because, I suspect, you’re ahead in the polls you’re not too worried about that-
LEIGH: Well, Raf, I’d prefer it if they weren’t fulminating. I’d prefer if they were dealing with climate change, if they were worried about bringing down record government debt, I’d prefer if they were thinking about how to fund our schools properly. Fulminating at Labor is not the job of a sensible government.Read more
ANDREW LEIGH MP, SHADOW ASSISTANT TREASURER
ED HUSIC MP, SHADOW MINISTER FOR THE DIGITAL ECONOMY
ATO OUTAGES: ENOUGH IS ENOUGH
Australia has woken up to news of yet another ATO outage.
While Labor is the leading light on tax reform, the Government can’t keep the lights on at the Tax Office.
Enough is enough. Labor has urged the Turnbull Government to come clean on what is happening, but Malcolm Turnbull remains silent.
The Turnbull Government needs to explain to individuals and tax agents exactly what impact this will have on their ability to lodge tax returns for the rest of this tax season.
We have also repeatedly called for an investigation into these outages, something else the Government has ignored.
It's not good enough to blame the public servants, who have been left struggling after the Turnbull Government slashed more than 3000 jobs.
Malcolm Turnbull needs to tell Australians how many outages there have been and for how long. Taxpayers deserve to know what the Turnbull Government is doing - if anything - to fix this problem.Read more
STOP THE INFIGHTING AND JOIN THE REAL BATTLE
Regulators have got phoenix operators in their sights, but they need better laws to help them protect hardworking Australians and crack down on dodgy directors.
The Australian Financial Review reports that the Australian Tax Office and the Australian Securities and Investments Commission are targeting advisors who seek out struggling companies and direct them to strip their assets and rip off the taxpayer.
Their job would be much easier if a number of simple measures proposed by Labor were agreed to by Malcolm Turnbull.
Labor is calling for the introduction a director identification number, so those flouting the laws can be stopped in their tracks. It’s an idea which has the backing of a range of legal and industry groups, as well as Liberal MP Nicole Flint.
We also want to increase penalties associated with phoenix activity, to make it less tempting for people to rip off legitimate businesses and workers.
Labor has urged the Turnbull Government to adopt its sensible measures to tackle this dodgy behaviour, which costs billions of dollars a year. It’s time Malcolm Turnbull stopped fighting Tony Abbott and turned his attention to the real battle.
TUESDAY, 25 JULY 2017