But seeing as how low-paid (and high-paid, by the way, of which I’m sure there are some) people in the welfare sector currently don’t have to gross up the value of their fringe benefits at all, they are getting an unfair benefit relative to other employees on similar wage levels. And the current high level of take-up of fringe benefits in the sector is a reflection that people understandably respond to the incentive this creates.

I wouldn’t have minded so much if the spokespeople for the sector had simply argued for a change in the grossing-up formula to reflect the levels of tax individual employees pay, but the fact is they didn’t – they argued instead, at least by implication, that the current unfairness is perfectly reasonable.

As it stands currently, a person’s income for Family Tax and Childcare Benefit payments is taxable income + ungrossed FBs. So an employee who earns $40000 prior to salary packaging has an assessable income of $40000 for the purposes of FTB and CCB entitlements. I personally don’t see an issue with that. Yes they get a tax saving, but that is one of the benefits on offer for working in a low-paid sector. If the grossed up figure was counted as assessable income for FTB and CCB (as it is for calculating HECS/HELP repayments, CS, and medicare levy), an employee who earns $40000 p.a. and salary packages $16050 would have an assessable income of $53950. This is far beyond what they have saved in tax, and not equitable, IMO. Well done to the Govt for picking this up.

Do you assume the employee’s income for the purpose of how much family tax benefit you pay is their taxable income, or do you assume it is the real value of their package once the ftb exemption is taken into account? All equity principles say it should be the latter, which is what the proposed change was going to achieve. It is amazing that Jenny Macklin has fallen for this one, as she knows the technicalities of this issue from her previous life when she worked for Brian Howe.

In public hospitals, too.

Well known to Treasury/Finance bureaucrats.

Looks like someone decided to pull the plug. And someone else a bit further up the line didn’t read their briefing papers thoroughly.

Dear me.

The rest is a beat up.

I see it rather Kev 24/7 still thinks he is Opposition Leader.

In particular, IMO the chances of getting a coherent, effective carbon emissions permit system are almost zero, irrespective of what Garnaut recommends. What we’ll get is lots of spin, high flown bullshit rhetoric and meaningless to marginally useful stunts like low energy light globes and subsidising Toyota to build hybrid cars here. The next house I buy is going to be on higher ground in a cooler climate that will become more pleasant and temperate as the world inexorably warms. The only hope is a lucky breathing space if the next sunspot cycle is attenuated.

Its not the working the system that I object to, but the fact that the self-appointed arbiters of moral values are apparently wholeheartedly in favour of one group of employees (theirs) getting more out of the system than other people.

No I fullly understand that’s the point of the post. I replied to the meta-discussion in the comments instead because I fail to see what’s surprising about the point you are making and don’t see why it needs discussion.

The news about the greens is even less surprising given that they are mostly populated by members of various not-for-profit lobby groups disguised as charities.

I suspect that funding formulas (and methods of adjusting for inflation) may make it a bit more difficult for those service providers to pay proper market-determined salaries to their workers (always assuming that they believe in such a concept of course). The gist of most of the pronouncements in the media over the past week was that employers in the sector really couldn’t pay higher salaries and therefore needed to be able to offer lots of concessionally-treated fringe benefits and the attendant privileged access to family assistance payments in order to attract workers.

But you know, I’ve met a lot of people from the welfare sector over the years and as far as I can tell they manage to lead fairly comfortable middle-class lives. So either the ones I know are exceptions to the general rule, or the salaries in the sector aren’t really as close to the breadline as they like to make out.

Yobbo – not sure whether you are in the right thread here, but the discussion isn’t actually about paying tax or not, but about the hypocrisy of the welfare industry. It’s not the working the system that I object to, but the fact that the self-appointed arbiters of moral values are apparently wholeheartedly in favour of one group of employees (theirs) getting more out of the system than other people.

If you want to give more of your income to the poor, there are better ways to do it than buying paying more tax so the govt can give it to Toyota.

If you are paying $0.01 more tax than you have to you have rocks in your head.

Some organisations want to do more with the funds they recieve than simply deliver the service that the government – whether it be Federal, state or local – is seeking. They may, in effect, cross subsidise another service that they believe is necessary or they may see a greater need in another area of their organisation. Workers get a lower salary than might have been assessed as ‘reasonable’ by the government agency but they are compensated by the tax system or through access to benefits. The organisation gets to spread the funds it can obtain across other activities.

So it is not necessarily the case that governments are underfunding services. It is often the case that non-government organisations will use every dollar they can possibly find to do the things that they see as important.

Whether or not this is an acceptable situation depends on your point of view. I would prefer to see transparency in the system and am not convinced at all that funds for services should be shuffled off to subsidise other unrelated activities.

2. One person’s rort is another’s income. Saying that this (or the capital gains tax concession or negative gearing or the lack of sensible water pricing or whatever) is a rort doesn’t avoid the fact that previous governments have encouraged people to take advantage of it and that those people will be worse off if it’s taken away.

3. A piecemeal approach to abolition of tax expenditures isn’t going to work. It will be unfair and politically hugely costly. A systemic approach based on broadening the base and lowering the rate is the way to go. The new government is presumably not figuring out _what_ to do – since the Draft White Paper, the unimplemented non-indirect tax part of the ANTS package and other Australian inquiries have recommended variations on this theme – but rather _how_ to get it done.

4. Nothing the current government has shown so far suggests that they understand how big this task is or that they have what it takes to carry it through, particularly given how many other large things they have on their agenda. On the other hand, maybe they’re getting all their ducks in a row before showing much at all.

The real argument here is what I alluded to in the beginning. I thought this was an unintended consequence of some other policy – but it seems to have been deliberate. This is a welfare rort. Nobody I’ve spoken to (today) thinks that this (individuals salary sacrificing themselves into poverty and then claiming welfare) is appropriate.

I thought it was the case that people working in the non-government community services were generally paid below what people doing similar jobs in government and industry would normally get.

But surely the point is that if people are receiving a very substantial proportion of their remuneration free of tax, they aren’t quite as low-paid as they appear to be (to the tune of $15-20,000 apparently, if the quoted figures for typical losses are anything to go by).

It seems to me (with my cynical hat on – sorry Sinclair) that there really is a kind of covert conspiracy going on here where everyone wins (except the taxpayer). The Government gets to underfund services, the employers get to reduce their wages bill, the employees get family benefits that a person earning an equivalent income elsewhere wouldn’t get and everyone gets to maintain the fiction that people in the welfare sector are self-sacrificing individuals who work for love rather than money. The point is we don’t really know what their real incomes are because they are receiving so much of it through salary sacrifice.

both Employers and employees seems to think it is their right to allow taxpayers to receive their total income rather than just the employer.

As I said previously if people criticise ‘rich ‘people for doing so ‘poor’ people can be criticised just as much.