New Year. New Arguments for Increased Taxes.

Leo Tolstoy:

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.

Here’s a panel, at this forum, that should put citizens at ease:

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.

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24 Responses to New Year. New Arguments for Increased Taxes.

  1. Robber Baron

    We need a tax strike.

  2. Roger

    I’m surprised Henry is still in public life.

  3. Pyrmonter

    Yet whenever anyone raises this issue seriously, the Right insist ‘culture wars’, mutter something about Patrick Deneen and plastic waste from China; the wise stay silent, and the quarreling with the Left about who can regulate more resumes. Even in the Cat.

  4. FelixKruell

    Agree entirely. But don’t forget the other clear waste when it comes to expenditure – overlapping Federal/State/Local responsibilities. Surely that’s the easiest place to seek savings.

  5. Whenever I want to save money, I look for two for the price of one bargains or 50% off sales, even if I don’t need the products. /sarc

  6. Spurgeon Monkfish III

    Implementing more and higher taxes is not “tax reform”.

  7. John Bayley

    There is a case for not only massively reducing taxes, but also, and equally importantly, to reduce complexity and regulations in general.
    I have just finished a professional conference related to financial services.
    It made me feel pretty depressed.
    ‘We’re from the government and we’re here to help!’
    Help private practitioners to apply for voluntary euthanasia – I guess that’s what they mean.

  8. Gerard

    Too many government departments, each needing a budget to run ‘programs’ that have to be managed and monitored, many doing things that are unnecessary or duplicate what other departments are doing or could be better done by the private sector.

  9. @Gerard

    … other departments are doing or could be better done by the private sector.

    There is a reason the private sector does not do them. They don’t need doing.

  10. struth

    Do you ever get the feeling having these tax discussions are a bit 1995?

    Us, I mean, not them………………it’s done already, they’re just having a laugh now, while talking shit for their parasitic existence, and to seem relevant to only themselves.

  11. Iampeter

    Opposing raising taxes? At the Cat? How quaint!

  12. liliana

    There is a reason the private sector does not do them. They don’t need doing.

    Beat me to it. Exactly, so much of what the PS does has no impact on anyone except keeping a bureaucrat in a job. If you want to see the nonsense the PS busy them selves with read “The Mandarin” website, it’s enough to make you weep. Lots of busy work that achieves little more other than justifying the need to do more busy work.

    And when something worth while does come along, they manage to stuff it up completely eg Centrelink’s robo-debt.

  13. Fred

    I’ve got a great idea to increase tax revenue.

    Remove the Division 293 tax exemption for politicians and judges.

  14. Spurgeon Monkfish III

    read “The Mandarin” website

    I wouldn’t recommend it to anyone with high blood pressure.

  15. Mother Lode

    Poida being pointless.

    How…Poida.

  16. Mique

    I stopped thinking that Ken Henry was likely to have anything sensible to say about anything much when he offered to help solve Canberra’s kangaroo plague problem by proposing that one mob on the old Navy radio base at Belconnen be trapped and transported to his hobby farm in the Southern Highlands.

  17. Jock

    I sent a response to the “review ” . The discussion paper was written by consultant using a lot of MBA speak. But at least it was honest. The State wants more money. The paper claimed that more was necessary in the future. It spoke of declining tax take caused by demographics etc. But in looking at the actual numbers, the tax take wasnt declining, but costs were rising. I had a go at them on this. Undoubtedly I will be ignored.

    They went through various state taxes. Yes I know they are inefficient but the answer is not a larger better Land Tax. I decided to put the boot in and proffered a Poll tax on every household. You could get rid of a lot of inefficient taxes and replace it with a nice upfront, transparent poll tax. Bet that went down like lead.

    I admit there is scope to reconfigure the GST carveup. But getting all states to agree something more rational? Good luck with that.

    I was disappointed by the overall direction of the discussion paper.

  18. Spurgeon Monkfish III

    The State wants more money.

    NO.

    This is why we weren’t blessed with a Teats and Turtle Goat Rodeo last May.

  19. Zatara

    … overlapping Federal/State/Local responsibilities. Surely that’s the easiest place to seek savings.

    Most efficient? Absolutely right.

    Easiest? Not a prayer. Reaching across borders to threaten rice bowls is even more difficult than doing so in the same agency.

  20. procrustes

    So, there also sits Blair Comley, Labor to his boot straps, and a true believer in the philosophy that the best and the brightest (ie Blair) should nanny about in people’s wallets and in their lives. Smart guy, but can’t help himself.

  21. Squirrel

    Two of the largest areas of State government spending – health and education – are growing at unsustainable rates, well beyond the growth in population, the economy and broader measures of inflation.

    That would be a major reason why States have become increasingly reliant on property conveyancing taxes, and have done little, if anything, to increase thresholds for those taxes in the face of soaring property prices.

    The windfall revenues from those taxes could have been used to reduce other taxes (such as payroll), to reduce debt, or even to spend on things which might even qualify as “investment” by government standards – like well-planned and genuinely needed infrastructure but, instead, they have been swallowed up in recurrent spending, which is always labelled as “investment” regardless of what it achieves.

    Much the same happened with the boom years of GST revenue.

    As to the proposed alternative – good luck with getting the punters to vote for an annual property tax on the family home in a nation with one of the highest levels of household debt in the world. Multi-millionaire public officials (current and former) seem oblivious to this minor detail.

  22. Terry

    Fix spending first! ie Cut! Cut! Cut!

    No doubt tax reform is much needed, AFTER the snouts are kicked from the public trough.

    How many public boondoggles do we have? How many can you have? Such a target-rich environment. Just get cutting already!

    Fixing the spending ensures tax reform is about which taxes to cut/remove/restructure (you know, REAL reform).

    Not doing so just means finding more buzzwords to vomit to “justify” screwing the taxpayer for even more of their hard-earned and collecting their “cut” on the way to pissing the rest right up the wall.

    It’s right about now that we should be tipping large quantities of tea into the harbour.

  23. David Brewer

    What’s the bet they end up proposing a carbon tax?

  24. _professor Fred Lenin

    Give me six months and plenary powers and I will solve the need for more taxes simply by cutting the dead wood and duplication of government departments . First abolish subsidies for carpetbagger “energy” totally ,put the scythe of the grim reaper through all government funded groups including politicians and publisc servants . In this drive for austerity reduce salaries ,benefits and pensions of all government employees ,that includes serving and former PM s . Why should you get a pension for being in a job for a few years ,no one else does . When I have finiashed that job transfer me to the regulations groups and the lawtrade ,I will put the fear of Gaia in them . After this taxes can be cut drastically ,that will stimulate the economy, Better than any government scam .
    Then we can start thinking of more reforms there are plenty to choose from .

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