Spare a thought for Ken Henry and his Treasury staff (official tabloid term: “boffins”). Every time there’s a new problem for the Government it gets whacked onto the tax review. The week before last it was whingeing pensioners. Now it’s an investigation of the interaction of the GST and fuel excise. Cos that’s “a tax on a tax”.
Hard to believe, isn’t it? A tax on a tax! Where do they get off having a tax on a tax? They don’t need a review to know that taxes on taxes are obviously, innately evil.
Indeed, they’re un-Austrayan.
The Government’s talking about removing it. Only days after attacking the Opposition for proposing to reduce fuel excise.
Which is odd, because I can’t see what difference there is between removing the apparently demonic “tax on a tax” and reducing the fuel excise by some arbitrary amount, which is allegedly the height of economic irresponsibility. Sure, the split between the Commonwealth and the States might be different, and the distortionary effects might play out slightly differently at the margins, but it’s still just revenue.
So when someone complains about how unfair “taxes on taxes” are, ask exactly what the problem is. Bet they can’t tell you.
And unfortunately, just because it’s a “tax on a tax” doesn’t mean you don’t have to make up the revenue from somewhere else if you remove it. Unless you’re Brendan Nelson.
But it’s a convenient out for a Government that might start to worry that the punters are dumb enough to fall for Nelson’s 5c a litre routine. The states can see which way the debate is shifting. Anna Bligh is already moaning about the effect on Queensland’s revenue if the tax on a tax is removed.
(Not that we’ll get very far if state governments are permitted to have a say on tax. Or anything else. The 2020 summiteers pretty much had it right: let’s abolish them. Take the states out behind New Zealand and shoot them. Surely the conservative side of politics wouldn’t object — it’s not like they’re going to ever run a State Government again.)
But maybe — yikes! — the states will have to have a new source of revenue to replace the tax on a tax. It could be called the no-tax-on-a-tax tax. Let’s hope there’s no GST liable on it, because that would be a tax on the no-tax-on-a-tax tax, and that would just start the whole vicious cycle off again. Especially if you own a cab or manufacture drawing pins.
The entire country seems to be drifting into petrol madness, pushed by motorists’ sense of entitlement to cheap fuel. And the tendency to magic pudding-itis has never been greater. Motoring groups have always been expert at pushing the view that fuel excise is somehow particularly iniquitous and should be cut, but never bother to say how the reduction should be funded, or why vehicle owners should get a tax cut ahead of other groups in the community. And when there’s a $20b-plus surplus, there’s even less pressure to explain how it’ll be paid for. “It’s anti-inflationary,” proponents say. Like the couple of billion dollars moved from governments to consumers will just vanish from the economy.
How did we get here? In the 1980s, if you peddled this rubbish, Paul Keating and Peter Walsh would publicly dine on your entrails. You’d be demonised as a rent-seeker, a fiscal vandal, an economic illiterate. Now their Labor heirs are too busy proclaiming how much they feel everyone’s pain to argue the case. That’s why they’re sneaking around trying to find a backdoor way into the populist position adopted by the Coalition.
Excuse me but I was under the impression that the money going to into govt was the peoples money not the governments and that the governments job was to provide services and infrastructure with the revenue gained through taxes not to be an investment bank running a $20 billion surplus with our money.
Now I know people are going to counter that lowering the surplus would have a negative impact on inflation and cause it to rise.
But if you understand that the largest driving factor in inflation right now in our economy is fuel prices.
It is affecting everything we buy, everything we need, from the basics of food to the luxury items.
In other words cut fuel prices you lower the inflationary pressure on the economy even when you cut the surplus.
In fact I would say cutting fuel prices should be the corner stone of bringing inflation under control not interest rates or surplus money.
This is a new world market not one that the old tried and true methods of bringing inflation down will work on. Not unless you pressure the economy to such an extent that you drive us into a complete recession and then with the cost of fuel continuing to rise you risk stagflation which is one place no one wants to every go.
Hold your horses Tony, there is always space for facts and truth against popular MYTH. Sometimes it just takes a little time to do the sorting.
Don’t forget that the NSW government already love the tax on a tax by charging stamp duty on the GST inclusive price of land (where GST is applicable to the sale).
WHy is “populist” used as a negative term in a democracy? Surely in a system where majority is meant to hold sway, populist shoudl be standard. The fact that people are attacked for expressing publicly popular views reflect the anti-freedom, undemocratic, dictatorial attitude of most of our political industry. Socialists, and budding dictators all.
Of course, the increasing price of petrol will bear harshly on rural people and people, many of them not well off, who dwell in outer metropolitan and regional centres and I, for one, feel for them. But how cruel for Rudd and Nelson to maintain the delusion that cheap petrol can be maintained. And how utterly stupid of Joe Hockey to even think, much less say, that petrol will always be cheaper under a Coalition Government. The experience of other countries which have artificially kept food prices down should teach us the folly of kowtowing to misplaced senses of entitlement. The lid can be screwed down for a while, but then it blows and, instead of a series of graduated price rises, to which people can adjust over time, they are faced with the price doubling or tripling or even quadrupling. This is inevitably what will happen with petrol prices unless Rudd, Nelson & co start showing some leadership on this issue and start educating the Australian motorist to the reality that petrol is never going to be cheap again because it is running out.