On morality

There has been an acquiescence of much of the media to spin from Labor about its proposed 0.5 percentage point increase to the medicare levy to ‘fund’ the NDIS. The spin suggests that opposing the levy – opposing the tax – is immoral.

Conflating support for a program (the NDIS) and the financing of the program (a tax increase) is problematic itself. But it is outrageous to imply impure motives to those who oppose either (or both) the NDIS (including its present design) and the financing method.

Morality is for individuals – it is what we do with our own resources and how we behave and act under various pressures. There are many valid objections to the NDIS in principle, many more valid objections to the likely implementation of the NDIS and many objections to the financing method.

It is not immoral to oppose any of these proposals – indeed it could well be the most moral and courageous course.

I think it is immoral to deliberately mislead citizens into thinking that a 0.5 percentage point increase to the medicare levy is sufficient to fully fund the proposed NDIS.  If the NDIS is so vital, and a hypothecated tax (which is in any case invalid under the Constitution) so important, why should it not be set at the level to fully fund the scheme? Recent evidence from George Mason university suggests that hypothecated taxes have a number of undesirable properties including: masking increases in government spending, increasing the total size of government, and reducing incentives for improving the efficiency of the programs tied to the hypothecated tax.

The medicare levy itself is highly problematic. Many people think it finances health expenditure, when in fact it only provides for a small fraction of health expenditure. This creates the expectation that people have ‘paid’ for their health costs through the levy, reducing the public’s scrutiny of the efficiency, effectiveness and efficacy of public health expenditure.

Additionally the medicare levy is not deductible. It sits atop the marginal tax rates, increasing directly the effective marginal tax rate. An additional 0.5 percentage point increase to the levy will reduce the efficiency of this tax further and create additional incentives for people to disguise (or reduce) their reported gross income.

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34 Responses to On morality

  1. Helen Armstrong

    The morality argument was used to great effect with Global Warming – if you questioned it, thought a tax was not the way to deal with it or pragmatically reasoned that adaptation was best use of scare resources, you were labelled as immoral, trashing your grand kids and so forth. (interesting that you could be trashing your grand kids by letting them live in a world projected to be a few degrees warmer, but it was ok to load them up with unprecedented debt through mitigation). This government has shown they reuse tactics until they no longer resonate. It is a bit like the movie remade so many times that the only thing going for it at the Mark 5 is its name.

    The thing is, like Henny Penny, the population have stopped listening.

  2. val majkus

    I asked a question on another thread a few days ago ‘how will the disabled be better off under NDIS’
    There was a comment on Bolt’s blog yesterday

    I have first hand experience of a person with a significant handicap. My elderly brother has suffered from a serious mental illness all of his adult life. He already receives adequate attention from a government sponsored mental health unit. At times he is over-serviced and I have to tell them about this as it upsets him. He requires considerable care and attention from the family.
    I am aware of a government funded respite service for parents of handicapped children that pays for the parents to have a holiday for a couple of weeks a year.
    All of these services exist under current funding arrangements and very (in fact overly) generous they are.
    I am totally opposed to another new tax to make an even more generous and grossly expensive support system.
    The unseemly tactics of the government in wheeling out disabled people to provide photo shoots for Gillard last week was disgraceful. But there is no low that this crowd will not stoop to in order to get re-elected.
    I am sorry but these performances do not cut it with me. They do no make me want to cough up an extra .5% of my income to, perhaps, extend the 2 weeks holidays to three or perhaps even free overseas travel. Who will know where the largesse ends once this scheme is in full throttle?
    What I do know is that we are fast reaching a place where we are going to go broke as a country. For if we do not have people in jobs to fund this grandiloquent scheme, we do not have a scheme at all and along with all else derived from the public purse, every service and pensions as well will begin to break down and perhaps disappear and this country will end up like the European basket cases around now.
    Tony Abbott made a bad mistake in supporting Gillard on this and he let down his own constituency very badly.
    Sometimes I wonder, in despair, just who there is to vote for who is capable of reflecting the true views and will of the majority.
    Australians are not heartless but they are not mugs either and we are being taken for a ride yet again.

    Anthony of Brisbane (Reply)
    Sun 05 May 13 (01:09pm)

    I suspect disabled people are in for disappointment. This is ‘feel good’ stuff and the Gillard Govt wants the levy legislation to be passed to boost its budget bottom line. But where are the details. And how does it improve the lot of disabled people and to whom does it apply?
    Abbott has set some good conditions for his support for the levy – the conditions to be met before the levy legislation is introduced and he must insist they be met

  3. Robbo

    Labor has always been prepared to make half baked promises and I can recall some real doozies with the best being the Cain Government in Victoria promising low income earners that they would be able to buy their Housing Commission houses with no deposit and paying 25% of their income, no matter how small that might be. The NDIS smacks of the same Labor Party cynicism. Just where will those “future savings” you talked about come from Julia?

  4. Token

    I think it is immoral to deliberately mislead citizens into thinking that a 0.5 percentage point increase to the medicare levy is sufficient to fully fund the proposed NDIS.

    I think it is rich that this government that has implemented a policies which have killed over 1,100 people at sea lectures anyone on “morality”.

  5. C.L.

    That a statist takeover of previously private charitable and philanthropic endeavours represents an improvement in social “morality” is the most pernicious and evil myth in Western politics. It makes ‘society’ colder, lazier and more uncaring – as generation after generation rests and withdraws content in the knowledge that the marginalised are somebody else’s worry. Namely, the state’s. Which is to say, not everybody’s worry but nobody’s.

  6. C.L.

    I only just learned that Nappy had a big teary blub while announcing his support for the NDIS the other day, Julia and Jenny at his side.

    Utterly sickening.

  7. Gab

    I will not be lectured about morality by that gillard woman!

  8. val majkus

    and for another feel good measure Tell Tony to Dump his Parental Leave levy
    All you have to do is fill in your details and hit submit!

  9. Judith Sloan

    Another issue with the Medicare Levy is that it does not operate on the same basis as income tax. There are several exemptions and so a much lower proportion pay the levy compared with income tax.

  10. Fire and Ice

    If it is immoral to oppose a small tax to assist the needy or to perform some good deed, then it must follow that it is immoral to pay any less than 100% tax – since the list of potential good deeds is infinite, and we are morally obligated to perform those good deeds, then we are also obligated to fund those deeds.

    Or, if it is immoral to not pay a tax, then where are the limits to to taxation? Since there are no limits to the good deeds that can be done.

    The thinking doesn’t stack up of course, and ignores the fact that coercing individuals to hand over their earnings is in itself immoral, even if it is ‘justified’ by a good deed.

  11. Luke

    90% of the population have political beliefs that are based solely on emotion. The left get this. Conservatives are still trying to rationalise voters out of positions they didn’t reach rationally in the first place.

    While conversatives waste time trying to explain and develope proper policies. The left just feed the egos. Why don’t you ask Barry which one of those strategies works best.

  12. Mother G

    I still believe it will all go into consolidated revenue and Sawn will add the projected revenue into his dodgy budget forecasts. Tellink porkies would just be normal for him.

  13. val majkus

    and where’s the Queensland Flood levy

    Thursday, April 18, 2013

    Canberra holds back on disaster relief

    Treasurer and Minister for Trade Tim Nicholls is writing once more to Federal Treasurer Wayne Swan in an attempt to get Canberra to release $725 million in disaster relief funds owed to Queensland.

    Queensland has been negotiating with the Commonwealth for months over the funds from the Natural Disaster Relief and Recovery Arrangements.

    “This $725 million relates to disasters that have occurred in Queensland since 2009 and it’s already been budgeted for in Wayne Swan’s forward estimates but it hasn’t been handed over,” Mr Nicholls said.

    “The argument is that the paperwork doesn’t meet the Commonwealth’s audit standards which were only introduced in 2011.

  14. The Australian Taxpayers Alliance are this morning calling for us to contact Liberal MPs and show our support for scrapping the paid parental leave pipe-dream.

    AMEN TO THAT.

    Surely there are better ways to help mums stay at home if they want to, eg. income-splitting for tax purposes?

    I like the idea of a parent being able to stay at home with very young children, but it’s just one more subsidised lifestyle choice that we can no longer afford. Enough with it.

  15. stackja

    This seems apt.

    Liberty Quotes
    “Whenever we depart from voluntary cooperation and try to do good by using force, the bad moral value of force triumphs over good intentions.” — Milton Friedman

  16. John Mc

    The spin suggests that opposing the levy – opposing the tax – is immoral.

    It’s immoral to violate higher ‘foundation’ rights, being your right to the product of your own labours and your private property, in the name of paying increased taxes to fund a lower level ‘obligation’.

    Democratically the government should be seeking some sort of mandate to do this that confirms, as much as practicable, overwhelming public support. Or they should simply cut spending elsewhere.

    If we had a sophisticated democracy our constitution would demand the Federal government obtains some sort of mandate. Or the states raise the taxes and the Federal government negotiates with them for some extra funding. Or better still, we have some real federalism, and the states provide the disability support, and the Federal government does a bit of redistribution between them.

  17. Whenever we depart from voluntary cooperation and try to do good by using force, the bad moral value of force triumphs over good intentions

    Force extinguishes mercy.

  18. Ellen of Tasmania

    Morality is for individuals

    I think morality is for governments – think murder, theft, rape.

    But charity isn’t. The more governments and lefties care about mankind in general, the less they care about people in particular.

  19. Arthur Or

    Particularly irritating article in the Age this morning by their resident “phillosopher” Tim, spanking the hoi polloi about this very subject. I suggest that if you are time poor or suffer from hypertension you should not read it.

  20. Arthur, I never read anything by someone whose surname I can’t pronounce with any confidence. Resident philosopher, my hat.

  21. I think morality is for governments – think murder, theft, rape.

    Those are more to do with the use of force than morality, or at least the subset of moral issues that are to do with the use of force.

  22. Chris

    Additionally the medicare levy is not deductible. It sits atop the marginal tax rates, increasing directly the effective marginal tax rate. An additional 0.5 percentage point increase to the levy will reduce the efficiency of this tax further and create additional incentives for people to disguise (or reduce) their reported gross income.

    The medicare levy is calculated based on taxable income, not gross income – eg after tax deductions. So I don’t understand what you’re going on about there.

    Mind you I think it should have been implemented by just increasing the tax rates because as you mention it doesn’t actually cover the whole scheme. And also it would cover people (such as those on work visas) who don’t have to pay the medicare levy.

  23. Val, the Queensland Flood Levy process should be grounds for leaving the Federation, considering the whole deal amounts to nothing else than theft from Qld to the Feds.

  24. Token

    Too true about the levy Winston, I remember the usual trolls defending that impost on “moral” grounds.

    Given that, the way the former QLD administration handled the “Premiers Flood Donation” is grounds for QLD to be kicked out of the Commonwealth. Many southernser gave good money which from all reports were seriously mishandled.

  25. Token

    Mind you I think it should have been implemented by just increasing the tax rates because as you mention it doesn’t actually cover the whole scheme

    So you do agree that the moral posturing, to put in place a tax in another name, which will not fund even 1/2 the actual projected outlays, is base and repugnant.

    Thanks Chris.

  26. val majkus

    “Premiers Flood Donation”

    Token I agree, I deliberately did not donate when I heard it was being run by Bligh
    Better in that case to give any donation to the charities on the ground in the flooded areas
    Not that I don’t believe in donating to good causes – the Black Saturday Fire Appeal was run by the Red Cross and I had no trouble with that donation

  27. How remarkable that this government keeps introducing taxes that don’t raise any or enough money.

    Carbon tax.

    Mining tax.

    And now NDIS tax levy.

    Is this some kind of perverted lefty morality that prides itself on its failure to make a profit?

    It seems closer to the USSR’s hideous financial muddles than anything else – while the nomenklatura quietly and steadily enrich themselves.

  28. Arthur Or

    Philipa, he is a philosopher, a political philosopher according to his academic CV whatever that my mean. In a past era he would have been the local priest or more likely the Verger.

  29. Arthur, you are too kind. In a past era he would probably have been the local wise drunk, or the local village idiot.

    Actually, given his ethnic background, in a past era he’d have been dead by now of either malnutrition, disease or warlords.

  30. Pedro

    How is it outrageous to claim the supporters of a policy position have impure motives? What nonsense. Anybody who labels big govt supporters as theives and moochers is doing exactly that. The moral dimension is an important element of any debate.

    I’ll admit I skimmed it, but that GMU paper seems pretty thin gruel when it comes to explaining anything.

    Yes, certain people think any tax rise is a moral act and one earmarked for the disabled will appear doubly so. But what of it? At the moment there is no NDIS and the program is supposed to lead to increased spending on the disabled. A tax increase to help pay for it makes sense if borrowing is the only alternative and borrowing would be more harmful. Before you get too excited, I agree that other spending could and should be cut, but that is not the debate that the Libs can safely have. Better to suck up the levy, cut the other spending and reduce other taxes.

    The fact that medicare is not fully paid by the medicare levy is irrelevant to whether a levy for the NDIS is a good idea.

    Back to the paper. An increase in taxes can’t hide an increase in spending. Obviously if there is a new tax and the old taxes are remaining, total spending must be going up. The only possible area of deceipt is the composition of that spending and that fudge can’t escape a review of the budget numbers anyway.

  31. Arthur Or

    I beg to differ Philipa, gittons would have been the local village idiot.

  32. Gab

    Essential Report: only lefties want tax increases. I say we give it to ’em. Tax increases by political affiliation from now on.

    Q. Do you think the Government should raise taxes or cut spending to reduce the national debt or should they do neither?

    Raise taxes: 13% say yes. 28% vote Green, 23% vote ALP, 5% LNP.

    Reduce spending: 55% prefer this to increasing taxes. 74% LNP, Green 40%, 34% ALP.

    http://essentialvision.com.au/category/essentialreport

  33. Ellen of Tasmania

    Those are more to do with the use of force than morality,

    The just or unjust use of force is also a moral issue.

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