Never let a crisis go to waste. Never waste the opportunity to hike taxes.
These are the yin and yang of modern public policy.
In a misleading article in the AFR, John Kehoe writes that:
No. No. Sorry no. The problem is not a tax failing. It is an expenditure failing. It is a government failing.
Australia’s consumption tax is the second lowest revenue raiser out of all advanced economies, forcing the federal and state governments to resort to “more damaging taxes” on personal income, business and property transactions, warns a new report commissioned by the NSW government.
Australia’s consumption tax is the second lowest revenue raiser out of all advanced economies. Yeah. So. Does this mean Australia needs to increase its taxes to compete with the economic profligates in Europe? What an utterly ridiculous proposition.
Perhaps it is the Europeans who should be admiring Australia’s low rates of consumption taxes.
And let me break it to Mr Kehoe. It is not the low proportion of consumption taxes that is “forcing the federal and state governments to resort to “more damaging taxes” “. It is the insatiable spending habits of federal and state governments that is forcing the resort to such taxes.
Gotta love this bit too:
Former federal Department of Finance head and current director of ANZ and Crown Resorts, Jane Halton, warned the eroding GST base was “at a cliff, a precipice” and it would become harder to fund essential government services like health and education.
Consumers are buying more GST-free items such as rent, health, education and some internet purchases, so the GST taxes about 55 per cent of household consumption, down from 61.5 per cent in its first year in 2000-01.
Taxing 55% of household consumption is not really a cliff face to TAFKAS’ mind. But this absolute deception is in this statement.
The reason this percentage is declining is because of the increased consumption of tax free items such as rent, health, education and some internet purchases.
The internet purchase item is just nonsense given the blatant tax grab by Treasurer Frydenberg to reduce the import GST free threshold from $1,000 to NIL.
But the other 2 big ticket items are health and education; 2 services managed, charged, “produced” and distorted by government.
So what is really being said is the because the government is too incompetent to manage health and education — everyone else has to pay for it.
So Ms Halton, as former head of the Commonwealth Department of Health, how well did you set up Australia for managing a pandemic and what does Australia get for the $700 million tax payers give to the department? Huh?
In one of his very few recent recent pieces where he was to the point and didn’t write like he was paid by the word, Paul Kelly hit it on the nose yesterday:
The politics of GST reform are obvious: the states get the revenue and are the winners, the national government must tolerate the political heat. Exhortations around the 20th anniversary that strong leadership is needed to launch another GST reform are both true and worthless.
Message to Australian Governments. Fix your own finances before you try to screw ours.