Policies
Taxpayers
HERE'S A BENEFICIAL TAXATION REVOLUTION YOU'D WELCOME!
- Zero income tax for people earning under $90,000
- Elimination of payroll tax
- Reducing company tax to 20% for small business to encourage employment and investment
- The introduction of a Bank Transaction Tax or BaTT
- Charge appropriate royalties for our mining and gas (like almost every other country does)
Policy Summary
Australia's income tax system is widely recognised as inequitable, yet meaningful reform has been elusive. A bold proposal to address this is the introduction of a Bank Transaction Tax (BaTT), which could eliminate personal income tax for over 50% of taxpayers (those earning up to $90,000 annually). Incredibly, this 50% of taxpayers contribute around just 12% of the total income tax revenue. A BaTT would replace this revenue “hole” and more.
The BaTT would impose a small tax estimated to be as low as 0.2% on every bank transaction, taxing money rather than people. This money flow is in the trillions of dollars annually, the broadest possible tax base.
Under this system, the average earner would save over $400 per week in income tax and pay only $7 per week in BaTT. The BaTT would generate enough revenue to also replace inefficient taxes like payroll tax.
How it works
The BaTT would clip the ticket of every dollar moving through the Australian financial system, i.e., every dollar debited or credited to every bank account, making it the broadest based tax possible. Whereas personal income tax is a tax on people, the BaTT is a tax on money.
Because the BaTT is collected automatically by the banks and sent to the tax department, it cannot be avoided with highly paid tax accountants and lawyers.
Because the BaTT is collected automatically by the banks and sent to the tax department, it cannot be avoided with highly paid tax accountants and lawyers
A positive outcome for all businesses
A BaTT would permit company tax for small businesses (currently defined by the ATO as a business with a turnover of up to $10 million) to drop to 20%. It would also fund the elimination of “bad taxes” like payroll tax (considered by many experts to be a tax that limits employment).
A productivity boost
Another benefit of a BaTT is that any additional income up to $90,000 per annum earned through overtime wouldn’t be taxed, something that would have a positive impact on the nation’s productivity (as most of us would be happy to do more overtime if we didn’t lose a big chunk of it in tax).
How a BaTT would be introduced
A BaTT would be introduced over at least two parliamentary terms following consultation with affected stakeholders, such as the capital markets, which will require exemption and a thorough review and testing by the Treasury. This would also reduce any inflationary effect of introducing such significant tax relief.
Compensating low-income earners
Because the small tax would slightly disadvantage the lowest income groups like pensioners and workers, compensation measures would be introduced, such as higher social security payments and the raising of the minimum wage.
One of the fathers of modern economics, John Maynard Keynes, first proposed a bank transaction tax in 1936. More recently, renowned economists and economic think tanks, such as Nobel Prize-winning economist James Tobin, ex-US Secretary of the Treasury Lawrence Henry Summers, and the Milken Institute, have supported it. In fact, a tax like the BaTT has few detractors among top economists
It's the tax supported by internationally renowned economists
One of the fathers of modern economics, John Maynard Keynes, first proposed a bank transaction tax in 1936. More recently, renowned economists and economic think tanks, such as Nobel Prize-winning economist James Tobin, ex-US Secretary of the Treasury Lawrence Henry Summers, and the Milken Institute, have supported it. In fact, a tax like the BaTT has few detractors among top economists.
Is there a BaTT in use elsewhere?
Some form of financial transaction tax is in effect in over a dozen jurisdictions internationally, including the UK, France, Italy, Hong Kong, and South Africa. However, they are usually an additional tax rather than a mechanism employed to replace personal income and other taxes. Transaction taxes also existed in most Australian States till the Howard government convinced the states to remove them in exchange for a share of the new GST.
Why isn't a BaTT more widely used if it's such a great alternative to personal income tax?
One economist offered the opinion that "No one uses it because no one uses it." But now, as the world moves away from cash towards invisible movements of money recorded almost entirely online, a transaction tax like the one proposed by the Good Party is the logical and fair way to finance government spending into the future.
Fair royalties for access to our minerals and gas
Australia has vast mineral wealth, but once it's dug out of the ground and sent overseas, it's gone. The Good Party thinks royalties levied on these finite resources is not only fair, but reasonable. Most other countries do it, and Norway has built a $1 trillion sovereign wealth fund based on royalties for its oil and gas.
Royalties could be adjusted as world market prices move up or down to be fair to both the miners and the nation.
Mining companies' argument that they pay taxes and provide jobs doesn’t hold up when you examine it closely. The taxes paid are always minimised, and the jobs are rarely permanent, with the mining operation folding when the resource runs out or the market dips
Mining companies' argument that they pay taxes and provide jobs doesn’t hold up when you examine it closely. The taxes paid are always minimised, and the jobs are rarely permanent, with the mining operation folding when the resource runs out or the market dips.
Since 1996 Norway has been taxing the profits of its oil and gas sector at 78%. In 2023, this has generated a staggering A$127 billion or around $23,500 for every Norwegian citizen (figures from The Australia Institute).
Meanwhile, Australia’s tax on the gas sector in the same period generated a measly $16.3 billion.
More locally, the WA Government is expected to receive $522 million in royalties from the gas industry in 2024-25, down from $660 million in 2023-24, and will contribute just 1.3% to state government revenue.
This is less than half of the $1.319 billion expected from vehicle registration fees.
The gas industry also pays little in federal tax – the combined tax payments of Chevron, Exxon, Woodside, and Shell raise less money than beer excise.
Just 0.7% of the state’s workforce is employed in oil and gas extraction.
The miners could reduce their royalties by investing in green energy projects like green hydrogen to replace coal and gas in power stations or use in the production of green steel and aluminium
How miners could sidestep paying the royalties
The Good Party can also see a way to make everyone happy. The miners could reduce their royalties by investing in green energy projects like green hydrogen to replace coal and gas in power stations or use in the production of green steel and aluminium. Win-win.
It really is time for the mining industry to put something back. The mining boom might well have come off its peak, but when enormous profits are being generated. Australia should receive a long-term benefit for giving mining companies the green light to have access to our finite resources.
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