Henry Review

If the people looking after the nation’s bank account can’t estimate what it costs to take wealth with one hand and re-distribute it with the other, we are in trouble.

Millions of Australians interact daily with a system of swings and roundabouts called the Transfer System. It’s a complex network of welfare payments, concessions and benefits that involves all three tiers of government.

Retirees and families with children receive 63 percent of this pie so the changes that are inevitably made around Federal Budget time have a broad impact.

Continue reading "The big scary labyrinth at the heart of the tax system" »

Alcohol. The anti-alcohol lobby say just one drink increases your risk of cancer, and news yesterday was that cigarette-warning-style labels will start appearing on bottles of booze. The social costs of alcohol are often cited as an additional reason to crack down on it. Here, Dr Eric Crampton casts a sceptical eye over how that social cost is measured.

If I told you that surfing cost the Australian economy a billion dollars and that we consequently should make life jackets compulsory, you could be forgiven for thinking that the number represented some real cost to the community; perhaps the cost of rescuing surfers caught in rips or medical care for those injured in accidents.

But if you found out that the vast majority of that figure was the combination of surfers’ expenditures on their boards and the costs of holidays they took heading up to Yallingup, you might think twice about endorsing the policy recommendation. And you might wonder a bit why anybody would have thought those costs could matter for policy.

Continue reading "Don’t base policy on crapulous alcohol statistics" »

I was at a pub a couple of weeks ago and a friend asked my prediction about the election. Not much into making predictions I speculated that Abbott would do better than anyone expected and the ALP were running a campaign that could ruin them. One of my other friends jumped in and said, ‘it’s the tax, the mining tax, the idiots should never tax the one thing that makes us rich’.

An interesting debate followed that only ended when someone reminded me that it was ‘my shout’. Being a Saturday night and with the footy on the big screen, I think we simultaneously decided that this discussions about tax do not make for an ideal night out.

While the country remains in political limbo and the power brokers are cutting deals, the mining tax is one of those issues that seem to be bubbling below the service.

Continue reading "Why the Independents should dig the mining tax" »

In an election campaign marked by both sides saying as little as possible about tax reform, yesterday’s National Press Club showdown continued the pattern of inertia.

Treasurer Wayne Swan and Opposition spokesman Joe Hockey talked about stimulus packages, waste and costings. They talked around tax reform. They mostly avoided talking directly about it.

Coalition leader Tony Abbott had already flagged that a Coalition Government would re-visit the Henry Review, with a view to announcing a plan within a year. That’s just a plan for a plan.

Continue reading "Both the Coalition and Labor are bottling it on tax reform" »

I think I’m with the miners – just why did the Prime Minister and Treasurer let the banks and finance groups off the hook when it came to tax reform and revenues for the common good?

As one mining industry guy said this week, there’s a whole part of the banking and finance sector involved in ‘moving money around and not creating anything of value’, and which does not pull its weight in revenue generation for the common good.

I’m surprised that a Government, that’s more than willing to run on the theme of ‘nasty foreign extraction companies taking our wealth offshore’, couldn’t have come up with an anti-banks campaign.

Continue reading "Forget the nasty miners PM, what about the banks?" »

Since the release of the Government’s response to the Henry review on Sunday, Tony Abbott and other reform opponents have repeatedly and falsely claimed that only small businesses that are companies would benefit from the proposals. Mr Abbott said it again yesterday, and it’s an out-and-out lie.

Here’s the truth – every one of Australia’s 2.4 million small businesses will get a tax break under the Rudd Government.

Sole traders, partnerships and incorporated small businesses will all be able to deduct instantly the cost of assets valued at up to $5000.  And these 2.4 million small businesses will be able to pool assets costing more than $5000 (other than long-lived assets) and write them off at a single rate of 30 per cent a year.

Continue reading "Abbott has upended Liberal support for small business" »

How does a PM with seemingly no intestinal fortitude execute so many superb backflips?

A sticky narrative is weaving itself into the Australian psyche about Kevin Rudd’s flexible floor work in the field of political gymnastics.

Having changed his position on boats, batts and broadband, climate change and building 260 extra childcare centres, it’s no surprise that the metaphorical gym mat appears ready for Mr Rudd to execute a half-twist triple-pike on the recently unveiled mining resources “super profits tax”.

Continue reading "Kevin Rudd, gymnast" »

Pssst? Heard about the good tax? Hopefully after the release of the Henry Tax Review this weekend you will.

It’s called the Resource Rent Tax and, for those of us who want to see the development of frontier mining towns into sustainable communities, it is a thing of beauty.

It is always reassuring to hear the mining industry cry poor when new ideas are put forward to share the benefits of the resource boom.

Continue reading "Why a resources tax can build a better nation" »

It’s a political phenomenon as inevitable as a Troy Buswell indiscretion. Mention tax and people smell a rat.

As the Rudd Government prepares to release the Henry Tax Review, new polling from Essential Research shows what a tough time our leaders face when they want to review the nation’s revenue base.

Sixty one percent of Australians say they pay too much tax while just four per cent say they way too little. And even when you offer to the fix the problems that people want fixed, the majority would rather have the dour status quo than pay more moolah.

Continue reading "Tax is still a four-letter word" »

So who will be first to support the international ‘Robin Hood Tax’ – Kevin Rudd or Tony Abbott?

We can leave Mr Rudd to Gordon Brown to persuade. The question is whether a modern day Friar Tuck could tap into Mr Abbott’s policy pragmatism (or idealism, depending on your point of view) to persuade him to commit the Coalition to this great idea. Or perhaps Angela Merkel’s conservative lead on the proposal would be enough.

Continue reading "Who’ll move first to support the Robin Hood tax?" »

Taxation reform as a political issue may not float many people’s boat but in an election year it promises to be as entertaining as a day in the life of Jack Bauer. We have two political leaders - Kevin Rudd and Tony Abbott - who are equally unconvincing on the economy and who must grapple with a political hot potato.

The Rudd Government will soon respond to the final report of Australia’s Tax System Review Panel. The Panel, headed by Treasury Secretary Ken Henry, will recommend the most comprehensive reform of the tax system in a generation.

Taxation reform is a policy challenge more complex than quantum mechanics.  Australia’s existing tax system has outdated Commonwealth-State financial arrangements and effective marginal tax rates that discourage people on welfare from participating in the workforce. Australia also faces significant economic challenges that are intimately related to the taxation system, such as an over-reliance on mining for national wealth; an aging population; and the need to reduce the carbon output of the economy.

Continue reading "Tax reform: It’s a lot like 24, only in years" »