But Ms Mrakovcic said public debate over the proposal was mired by “rival estimates”. “No model is perfect and they do not produce facts,” Ms Mrakovcic said.
“The winner was not a genuine or helpful debate. There was just confusion. If you followed the company tax debate at the time there was a lot of modelling that was done. It seemed for a period of time that every week or second week there was yet new modelling.”
Treasury’s own modelling showed reducing the corporate tax rate from 30 to 25 per cent would have boosted economic growth by about 1 per cent over the long run.
The cost of the forgone revenue would have seen the federal budget lose about $65 billion over a decade. Ms Mrakovcic said economists had a “responsibility for the way in which we tell a narrative” about policy proposals and “recognise the power of the anecdote”.
Treasury’s wishlist of policy reforms will also be outlined at the conference today. Some of the measures include an overhaul to city planning and zoning restrictions as well as the replacement of stamp duty in favour of a land tax.
Now as it turns out I think that cutting the company tax rate is a good idea. Indeed if it were cut to zero then the problem of refunding excess franking credits would resolve itself.
The notion, however, that modelling shouldn’t be contested in simply beyond the pale and, frankly, irresponsible.
The notion that stamp duty be replaced with a land tax should be strongly resisted. It is a mechanism to make home owners pay again for the privilege of living in their own home. Stamp duty is a fee paid to government to recognise and enforce your property rights. Land tax is, well, a tax. It never ends. For years Treasury has tried to introduce an imputed rent tax – this is just another mechanism to find revenue.