Greens seek millionaire tax to revive parent payments
On track ... Adam Bandt, acting leader of the Greens, says the party's "reasonable" tax propsal should get support from the government. Photo: Justin McManus
A ''millionaires tax'' increase of 5¢ in the dollar would raise enough money to restore payments to single parents cut in this year's budget.
The Greens' policy, costed by federal Treasury, would generate at least $790 million over the next three years by lifting the top tax rate on income above $1 million from 45 per cent to 50 per cent.
The revenue boost could even be much higher, closer to $500 million a year, but Treasury has assumed some people on high incomes will not earn as much if their top tax rate is lifted.
The acting leader of the Greens, Adam Bandt, compared the money raised by the tax increase to a similar amount saved by the government when it cut payments to some single parents, which take effect from the start of next year.
''I think this is a reasonable step that should get the support of the government,'' Mr Bandt said.
''What possible justification could Labor have for hurting single parents and yet not touching millionaires? The Treasurer said he's been listening to Bruce Springsteen but he must've been listening to the records backwards,'' the Greens MP said of Wayne Swan's vaunted affection for the US rocker.
It was the second Greens policy to be costed by Treasury's Parliamentary Budget Office, established by the Gillard government as a price of securing the Greens' support in Parliament, and the party plans to release at least two dozen more by the time of the next election.
The tax increase would bring the top marginal tax rate to a level it last sat at in 1987, but would affect only about 8000 people listed by the Australian Taxation Office as recording annual incomes above $1 million.
The expected revenue would double from about $800 million to $1.6 billion in the next four years if Treasury dropped its assumption of ''tax income elasticity'', which says that growth in tax revenue will fall if tax rates are lifted.
The Greens are framing the policy in the context of cuts that kick in next week for single parents. From January 1, single parents on the parenting payment with a youngest child over the age of eight will be moved onto the lower newstart allowance, costing them about $60 a week.
The measure will save the government about $700 million in the next four years, but it has been criticised by the welfare sector and by some backbench Labor MPs.
The Gillard government argues the benefit of the measure is in encouraging parents back into the workforce.
Mr Bandt said: ''If the government is wanting to improve the budget position by somewhere around $300 million a year it has a choice. It could either increase taxes on the wealthiest Australians or it could hurt single parents.''
In the 1950s, Australia's top marginal tax rate sat at 75 per cent. It was above 65 per cent for most of the 1960s, and was above 60 per cent for most of the 1970s and 1980s. It now sits at 45 per cent, for any money earned about $180,000 a year.
The first Greens policy costed by the Parliamentary Budget Office was a revised mining tax that showed the government could raise an extra $26 billion in the next four year if it reversed concessions to the mining industry.