The government has been so bad at articulating exactly what it wants to achieve with tax reform that it’s not surprising to learn voters are completely confused about it. Today’s Essential Report, published by Crikey, shows that most voters believe one of the main goals of Turnbull’s tax reform is to fix the budget deficit — even though the government has repeatedly indicated it is not interested in increasing revenue.
In fact, the government appears to be primarily focused not on delivering a better tax system, or on encouraging economic growth, but on giving voters a tax cut before the next election. Media reports today suggest that, having abandoned a GST rise, the Coalition is now seeking to scrape together enough funding from (welcome) cuts in superannuation tax concessions and reductions in workplace deductions to give voters a tax cut.
This is ostensibly electorally appealing — but in truth voters identify fairness and complexity as their biggest concerns about the tax system, not how much they pay. And how responsible is it to be pursuing income tax cuts? The government repeatedly talks about bracket creep, but wages growth is so slow that many workers can only dream of being pushed into higher tax brackets. And the solution to bracket creep is simple, anyway: just index income tax thresholds and no one need ever worry about it again.
But at a time when our deficit remains stubbornly around $30 billion to $40 billion a year despite the efforts of both Liberal and Labor treasurers, and our net debt continues to mount into the hundreds of billions of dollars, it is hardly the time for Australians to be rewarding themselves with yet another tax cut. And that’s all the more the case given how little interest the Coalition government has shown in cutting spending.
Rip out the Rorts!
It’s a four word slogan so, being agile , an extra word makes it a new innovation!
But, seriously – super, private health & schools subsidies, negative gearing, excise rebates and that’s just for starters.
Then we could get onto the big stuff, like rip-off multinationals.
To be fair, they are (mostly) simply adhering to our tax codes.
How else are they going to buy the next election – the sugar sprinkles on their shit sandwich?
I just wish they’d give us credit for most of us realising that if we want services we have to pay for them. And paying for them collectively (through taxes) is cheaper than individually (especially what such services cost : the pittance of a “sanga and milk-shake kick-back”) – that most are happy to pay for them that way.
One would be more readily persuaded that they are truly interested in tax “reform” as opposed to tinkering at the edges, if all options really were on the table. The EU for example, is seriously investigating what is commonly referred to as a “Tobin tax”. Why is that not one of our options here?
The Tobin tax is an idea that appears inevitable. It can be set at a tiny rate and has the minimal real world effect of reducing incentives for banks and other legal money launderers to reduce speculative financial flows, which only add layers of risk to the world economy.
The bracket creep issue is a complete non-issue. The rise into the next bracket from 32.5% to 37% is inconsequential. One recent pollie put out some spurious figures showing that an individual would be paying $3800 extra because of bracket creep. Whatever analysis he did on the matter seemed to miss that this would require the individual to earn $84,400 more than he/she is currently.
I haven’t seen any journalist pick him up on that yet.
Reducing the government deficit through a reduction in government spending needs to be bi-partisan. Otherwise neither side will advocate it. Just witness the deluge of vitriol the last time the Coalition tried this with Hockey’s first budget. The same applies to tax reform which won’t happen without a bipartisan approach. How pathetic it is to see Shorten attacking Turnbull for not entertaining an increase in the GST. All I’ve heard Turnbull say is that the possible gains from tax reform are not worth the political pain. In this instance, “political pain” means “Shorten” and the country is worse off for it.
While Shorten is going round offering pie in the sky you can’t expect Turnbull to do anything so unpopular that he loses the next election. So accusations of Turnbull “doing nothing” blah blah will be water off a duck’s back as the Coalition handily wins the election later this year.