Abbott’s taxing times

Could someone please tell the bulk of the mainstream media that Tony Abbott has a great big tax in store for us? It comes under the The Coalition’s Paid Parental Leave (PPL) scheme which will be funded by:

. . . a 1.5 percent levy on companies with taxable incomes in excess of $5 million. This will apply only to taxable income in excess of $5 million. The levy will affect approximately 3,370 out of 770,000 companies in Australia.

It’s hard to see a distinction there on the carbon price which is aimed at the largest 500 polluters in the country, which Tony Abbott calls a carbon tax, although it obviously isn’t.  But the media has let him get away with his absurd rants and to most of the populace it is now a dastardly tax.

Meanwhile, his PPL scheme is a levy. We should be returning fire and calling it a tax.

To date I’ve only found one article in the mainstream media that puts his PPL scheme under the microscope. It dates back to March 2012 when Tony Abbott was at the height of his ‘Carbon Tax Doomsday Tour’. The story has been dead since. Returning to the article, Samantha Maiden tried to put Abbott to the sword when she wrote in Adelaide Now that the PPL would ultimately have a greater negative affect than the carbon tax. The article is reproduced below and is a worthwhile read:

HERE’S a surprising fact about Tony Abbott’s paid parental leave plan that hasn’t attracted much attention: the new levy to pay for the scheme would hit more companies than the carbon tax.

Surprised? Consider the numbers. Julia Gillard’s carbon tax will be imposed on about 500 of the nation’s biggest polluters.

Abbott’s tax levy would hit an estimated 3300 businesses with a 1.5 per cent levy.

Isn’t that a great, big, new tax coincidence, to deploy Abbott’s favourite mantra ?

Let’s set to one side the world-class hypocrisy of Labor turning up its nose at the politics of “class welfare” on the schools funding debate while simultaneously diving in to slag off what it calls Abbott’s “Richie Rich” program for cashed-up working mums.

Much of the criticism of Abbott’s scheme is indeed centred on that generosity to a handful of wealthy women.

It would offer women a full replacement wage for six months funded by taxpayers, up to an eye-watering $75,000 for women earning $150,000 a year.

But even Labor concedes fewer than 500 women would gain access to the scheme that would not under their existing means-tested parental leave scheme paid at 18 weeks at the minimum wage.

Less attention, however, has been paid to the size of the Abbott scheme and the potential cost impacts for consumers.

Would a 1.5 per cent paid parental leave tax on electricity generators, for example, drive up power bills? By how much? Would Woolworths and Coles increase the price of milk and bread?

Is it possible that some low-emission, high-profit companies such as banks and retailers could actually pay more upfront under Abbott’s parental leave plan than the carbon tax? Wouldn’t that be hoot.

If the Coalition argues the cost impact would be modest, how does that stack up with their claims the carbon tax will be catastrophic?

And what happens if Abbott is elected prime minister but a hostile Senate dominated by the Greens will not allow him to wind back the carbon tax?

Would companies be forced to pay both the $5 billion carbon tax and the $3 billion paid parental leave levy? So many questions.

According to the last mid-year budget update, the carbon tax will raise $25 billion over three years, including an estimated $7.6 billion over the first year.

That’s substantially more than Abbott’s $3 billion paid parental leave scheme, but bear in mind there’s no compensation to cover cost-of-living impacts. The carbon tax by comparison will raise a lot of cash but it will also distribute $5 billion in tax cuts and welfare payments as compensation.

As the Coalition policy documents show, it would cost taxpayers a whopping $4.5 billion a year to run Abbott’s parental leave scheme.

It would be paid for by a 1.5 per cent levy on businesses with taxable incomes over $5 million.

There are also savings from rolling in the baby bonus scheme and family tax payments and replacing Labor’s scheme.

Don’t get me wrong. It was high time low and middle-income women had access to a paid maternity scheme. Abbott’s scheme is more generous for many families than Labor’s 18-week minimum wage scheme.

It’s a sign “the Coalition gets it when it comes to the modern Australian woman”, Abbott spruiked this week.

There are great arguments why parental leave should be a workplace entitlement, not a welfare cheque. By encouraging women to participate in work as a result of generous maternity provisions, there’s a strong argument that it’s a productivity measure.

In a win for women’s retirement savings, the Coalition paid parental scheme also includes the payment of superannuation contribution payments at the mandatory 9 per cent.

But if you think it’s cheeky that Abbott wants to bang on and on about the impact of the carbon tax while introducing a $3 billion levy on business to pay for parental leave, you are not Robinson Crusoe.

It’s an ordinary state of affairs when a probing analysis like this takes a back seat to Abbott’s scare campaign for months on end.

What do you think?

Mad Monk

Mad Monk (Photo credit: liamalexander)