Tax isn’t a sexy topic, but Treasurer Wayne Swan’s two-day tax forum produced a few ideas worth getting excited about. These include hiking the tax-free threshold, a timeline to harmonise state taxes, a crackdown on foreign workers getting tax-free living-away-from-home treatment, examining tax loopholes such as negative gearing and a new think tank on tax reform.
The government’s first priority is to raise the tax-free threshold to $21,000 (it sits at $6000). The change means 1.2 million people will be exempt from paying tax, writes Phillip Coorey in The Sydney Morning Herald, but there is no set timeline on the change. It will be down when it is “affordable”, said Swan.
David Crow in The Australian Financial Review set the scene nicely:
“The scars of last year’s mining tax row were all too obvious in Canberra yesterday as a disjointed conversation about the tax system ended with modest commitments that might one day lead to change.
Agreement on reform was never likely at a tax forum set up by a reluctant government to hear from leaders who tended to restate their positions to an audience that knew them already.”
Former Treasury secretary — and chair of the recent comprehensive tax review — Ken Henry yesterday told the forum that tax needed to be publicly debated in a serious way.
“The point that reforms should not be pursued as one big bang package is worth reprising on an occasion such as this,” said Henry. “More important is the general point that good policy outcomes are more likely when there has been a high-quality debate.”
The changes outlined by Swan were small but critical, says Michelle Grattan in The Age:
“Wayne Swan entered the final session of the summit with a small basket of policy presents, determined that the participants should leave, if not satisfied, at least with something.”
Some genuine tax reform is happening right now in Australia, but it’s mainly thanks to the Prime Minister rather than the Treasurer, writes George Megalogenis in The Australian:
“The Prime Minister is becoming more confident with the notion that reform begins with the airing of dangerous ideas. But the Treasurer is still prone to talking like it is last year, telling people what he won’t be doing.”
But David Uren can’t find a tax hero anywhere. He writes in The Australian: “No reform prospers without champions, without politicians who are prepared to argue it up hill and down dale. They are nowhere to be seen.
Regardless, it’s important to have these kind of events. “Summits and forums may have a bad reputations but in an age when policy doesn’t get much of a look-in, we need them more than ever,” notes Laura Tingle in The Fin Review.
I don’t know why everyone is getting excited about the tax free threshold committment. The government has already said it was going to increase this threshold as part of the Carbon tax (from $6000 to $18200). So all Wayne Swan is saying is that he will increase it another $2800 at sometime yet to be determined. Yawn! Hardly a great outcome from a two day talk fest.
I’m actually surprised anything came out of this chat at all. Whenever the States come to town in Canberra they bring their begging bowls and try and cadge a few handouts. Bottomless holes into which we pour money really.
One day we should have a serious policy discussion about bypassing the States altogether and just putting Federal tax dollars straight into local delivery systems. As far as I can see the States are just a set of 19th century relics that run essentially parasitic tax systems and serve as vehicles for fragmented self-interest.
A plague on them all.
[“I don’t know why everyone is getting excited about the tax free threshold committment. The government has already said it was going to increase this threshold as part of the Carbon tax (from $6000 to $18200). So all Wayne Swan is saying is that he will increase it another $2800 at sometime yet to be determined. Yawn! Hardly a great outcome from a two day talk fest.”]
Labor didn’t even really raise the tax free threshold because they jacked up the rates on the other rates and ditched the low-income payment.
Net difference? Not much.
Section 123 of the consitution deals with the removal of the state powers…
“The Parliament of the Commonwealth may, with the consent of the Parliament of a State, and the approval of the majority of the electors of the State voting upon the question, increase, diminish, or otherwise alter the limits of the State, upon such terms and conditions as may be agreed on, and may, with the like consent, make provision respecting the effect and operation of any increase or diminution or alteration of territory in relation to any State affected”
Somehow I don’t see a parliament of the state ever deciding to remove itself from power (and revenue). It might do it for some areas, like health and education maybe, but I can’t see itself giving up all it’s influence
If you want to get rid of a level of government, best to focus on removing local councils.
Ah yes Scott … I can’t see any State willingly throwing itself onto the scrap heap of history. We will probably have to use force.
But Local Government can actually do stuff… nice and local, accountable and open to the community. States can’t really work any more. Increasingly the NSW Government is actually the Sydney Government, same with Victoria and the end of the tram tracks. Try living in the bush and getting anything – anything at all – from a State government.
I’m not so much interested in eliminating a tier of government – just for the heck of it – as abolishing something useless and counterproductive. Government itself isn’t a bad thing – but useless and corrupt governments certainly are. But I am no longer holding my breath.