Flat White

How is it fair that unions pay no income tax?

18 July 2019

5:00 AM

18 July 2019

5:00 AM

The ACTU continually complain that business, including small business, don’t pay their fair share of income tax. The complaints often focus on companies, who use loopholes to minimise their tax, often to the extent of no income tax being paid. Given the frequency of those complaints, hardworking Australian taxpayers would be forgiven for thinking that unions are always the first in line to pay their fair share of income tax. However, the ACTU’s rhetoric is in stark contrast to reality.

Unions earn revenue from memberships and various business activities. The former is declining source of revenue, while the latter is a growing source of revenue. If union revenue exceeds union expenses a surplus exists, however, under the current law unions are exempt from paying tax. This allows unions to legally avoid paying income tax.

While the ACTU rails against business and the “top end of town” for exploiting so called “tax loopholes”, the reality is unions enjoy the biggest tax loophole of all, a zero percent tax rate. This is an arrangement the big unions are happy to privately take advantage of while publically advocating that everyone else must pay their fair share of income tax.

It is ironic that union members are required to pay income tax, yet the unions they belong to have no such requirement. Consequently, income tax paid by union members funds vital community services and public infrastructure while their union contributes nothing towards schools, childcare, hospitals, nurses, aged care, pensions and roads. This irony is further compounded by the income tax paid by union members effectively subsidising their union’s income tax exemption. Clearly, this part of the tax system is broken and the rules need to be changed.

It is a paradox that Federal Labor politicians, almost all of whom worked for a union before entering parliament, regularly oppose income tax cuts for individuals and businesses. This is despite the unions they previously worked for already enjoying the biggest tax cut available.

If the ACTU wants business to pay its fair share of tax then unions must lead by example and support a change to our tax laws to ensure that no union pays an income tax rate less their members pay. Unions who do not support paying income tax at the corporate rate on their surplus funds have one rule for themselves and another for their members. Union members who pay hundreds of dollars in union fees annually are entitled to be angry. Every Australian taxpayer needs to ask their federal MP one simple question: when are you going to change the law so unions pay their fair share of income tax?

Sam Puri is industrial advocate with the Printing Industries Association of Australia.

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