Former NSW premier Bob Carr has some tips for young scribes on his blog, lecturing journalists on their job at today’s tax thingummy, which this morning segued from an initial address from Prime Minister Gillard, to a speech by Treasurer Wayne Swan, to … morning tea.
“The role of journalists during the tax summit,” says Carr (erm, we believe that’s forum Mr Carr; summit sounds too productive) “is to force the advocates of tax relief to answer the old question: where’s the money coming from for the services that nobody — just nobody — is volunteering to go without.”
The man has a point:
“When the interest groups turn up and start pleading for reductions in income tax or stamp duty or payroll tax you are obliged to ask one question: how will you replace the lost revenue? And don’t accept vague references to cutting duplication or government advertising or finding savings — as if nobody from either side of politics has thought of that one.
“You only get big licks of savings from reducing transfer payments, that is social security. Wayne Swan has done terrifically well in winding back middle class welfare but even that bought howls of protest from the opposition and part of the media.
“Demonising payroll tax or stamp duty is easy but mostly it is a knee-jerk dismissal — ‘tax on jobs’, tax on housing. Tell us the alternatives, please. The real challenge would be to take Treasury’s advice and, yes, lower the rate — but broaden the base. That would mean taxing more businesses on their payroll but at a minimal rate and leveling a tax on all homes on an annual rate but none on the transfer of homes. Easily said. But too difficult to sell. Impossible to sell.
“At least be honest.”
Honesty might be optimistic. After all, some sections of our media met the last piece of tax reform with a completely spurious “Just Because I’m Earning Over $150,000 Doesn’t Mean I’m Rich” campaign.
As Chris Richardson from Deloitte Access Economics pointed out on Radio National breakfast this morning, there is a broad degree of consensus amongst economists around what needs to be done: abolishing many state taxes, examining insurance taxes, improving GST, superannuation, and property industry reforms like reassessing capital gains tax and stamp duties to name just a few.
The kicker? “Both sides of politics are much too busy wrapping each other’s hands around the other’s throats and squeezing hard … As soon as anybody says ‘yes that’s a good idea’ the other side jumps on it … it’s easy to demonise.”
Cold hard tax reform would be sweet, but in this environment, with a government cowed by a feral opposition and interest groups that publicly howl down any kind of move, maybe tea ‘n bikkies is the best we can hope for …
There is one way tax deductions could raise and save more money than they cost in revenue. This is by reducing business tax only for firms who transferred their income producing assets to voters who on average pay tax at higher rate than corporations and their owners like superannuation funds and foreigners.
The reported profits of firms would not be reduced if they gave away their assets as they recovered back the cash cost of the assets on a tax free basis from depreciation. This means that a small tax concession would provide firms with a bigger, quicker profit with less risk even when giving away their assets.
As around 45% of business assets are owned by foreigners it provides a way to “buy back the farm” to increase the profits retained in Australia that would be directly distributed to voters to reduce welfare payments. In this way a “boomerang ownership tax system” would reduce the need for government welfare payments while increasing revenues from individuals paying tax at higher rate than foreigners or participating local firms. In effect it is a way to privatise transfer payments.
As superannuation trustees have a fiduciary duty to maximise profits with less risks they would become legally obliged to vote at AGMs for firms to adopt the optional boomerang ownership arrangements with their employees and/or other stakeholders. Employee ownership of assets given away by firms would create an incentive for workers to care, maintain and operate the assets so they would last much longer than their tax write off time. A win win situation is create for all concerned with profound benefits as set out in my submission to the Tax Forum posted at: http://www.futuretax.gov.au/content/TaxForum/submissions/Dr_Shann_Turnbull.pdf
Dear Editor,
Congratulations, you have coined a new term ie: the feral opposition.
Henceforth they are no longer the federal opposition – your term wins for accuracy and definition.
Oh Zut, the feral government and the feral minister might fit as phrases, too.
I’m with ZUT! And HB, I don’t think your attempt to pass it off to the govt has any legitimacy at all. Like the bits of the PM’s speech which made the news, especially the snippet about ALL tax relief suggestions should be accompanied by complimentary p0licies to pay for it/them.
That should slow the rent seekers down a little!
How hard can it be? Tax the rich & the religions. No free rides.