I sit on a man’s back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means – except by getting off his back.
It’s probably safe to say that if you engage Dr Ken Henry AC to be your advocate for tax reform, you have certainly lost the debate. But more importantly, you cannot, should not, start a debate on tax reform in Australia without first having a debate on expenditure reform.
Firstly. Top marks to NSW Treasurer Dominic Perrottet for starting a discussion on Federation. He engaged David Thodey and a committee to do a review. No doubt the committee’s secretariat came from within the NSW bureaucracy.
In one end went consultations and submissions. From the other end, came ….. drum roll please …. tax reform; the modern euphemism for finding a new way for government to collect more tax while pretending that somehow people will pay less tax. Note for confused readers, if people are paying less tax, then the government can’t be collecting more tax.
They may tinker with a rate here or there. They may tinker with the base there or here. They will claim it is about efficiency, equity, fraternity. But what it is fundamentally about is satisfying the insatiable and voracious fiscal appetite of the big state.
Here’s TAFKAS’ simple tax reform program. Cut government spending by 30% and cut taxes equivalently. That will improve the efficiency and equity of the tax system faster than a speeding bullet.
But coming back to that icon of fiscal credibility, Dr Ken Henry AC. That same Ken Henry who used to be Chairman of NAB and got special mention in the report of the Royal Commission into Financial Services Misconduct.
At the recent NSW Review of Federal Financial Relations forum, Dr Ken:
warned economically damaging “stealth” tax rises on personal income and companies since his 2010 landmark tax review for the Rudd government have left the nation’s revenue stream at breaking point.
Really. How about economically damaging stealth government expenditure increases. Go early. Go hard. Go household.
Henry also said:
“If you look at what’s happened to the Australian tax system over the past decade … you’d have to say things have gotten very much worse, not better,” Dr Henry said on Monday.
Really. If you look at what’s happened to Australian government expenditures over the past decade … you’d have to say things have gotten very much worse, not better.
You know what happens when you put a bunch of senior public servants in a room to discuss budgets? Well, Adam Smith said this:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Senior bureaucrats in a room, being people of the same trade, not surprisingly advocate for increased tax revenues in a conspiracy against the public.
Yes. There is absolutely, positively a case to reform tax in this country. Stamp duty and income tax at the top of the list. But there is a bigger priority and that is government expenditure reform. When expenditure is reformed, tax reform is much easier. It is about reducing rates rather than shuffling rates and bases.
You can put as much lipstick and makeup on a pig, but it is still a pig. Tax reform may sound nice and fluffy, but ultimately it is about making it easier for the big state to get even bigger.