Anglicare Australia, a religious not-for-profit that advocates for the country’s most disadvantaged groups, has called on the federal government to take action on tax breaks and concessions in the next budget.
The call follows the release of The Cost of Privilege, a report commissioned by Anglicare Australia and undertaken by the left-of-centre think tank Per Capita.
New modelling that aims to understand how the tax and transfer system operates across different income quintiles was created. The modelling was also used to determine the extent to which measures within the system support the richest versus poorest Australians.
“The modelling assessed the various tax concessions and other benefits available to high-income earners and contrasts them with well-understood direct income support measures for low-income earners and those reliant on our social security safety net,” the report said.
The report quantified the annual cost to the federal budget of various measures that enable Australians in the wealthiest quintile to minimise their taxable income, thereby reducing government revenue that pays for services for all citizens.
These measures include superannuation tax concessions, negative gearing, capital gains tax (CGT) concessions, the use of discretionary trusts, and the exemption from capital gains tax of the principal place of residence.
“All of these concessions disproportionately benefit high income and high wealth households. Our analysis shows that, in combination, these measures impose a cost on the federal budget that easily outstrips that of any single welfare recipient group,” the report said.
According to Anglicare, the cost of foregone tax revenue from the richest 20% of Australians is over $68bn per annum. That’s around $37 a week from every worker in the country.
In contrast, the cost of income support in the 2016-17 financial year, segregated by group, was as follows:
- Age pension - $44.468bn (or $35 a week per worker)
- Assistance to families with children - $36.404bn (or $20 a week per worker)
- Assistance to people with disabilities - $31.721bn (or $17 a week per worker)
- Newstart - $10.994bn (or $6 a week per worker)
“The Cost of Privilege report finds that tax exemptions on private healthcare and education for the wealthiest 20% cost over $3 billion a year, superannuation concessions to them cost over $20 billion a year, and their Capital Gains Tax exemptions cost a staggering $40 billion a year,” said Kasy Chambers, executive director at Anglicare Australia. “Compare that to the annual cost of Newstart, which costs just under $11 billion a year.
“Following the latest round of welfare cuts, these numbers tell us that something has gone badly wrong – we have become a country that cuts from the poorest to give to the richest.”
