Tuesday, April 29, 2014

Red alert at the IPA

Even while I have my doubts that the "deficit levy" is necessary or wise (as a lead up to a serious proposal to expand GST somewhat, and review some tax benefits which need cutting, it may be a reasonable step, I guess), it amuses me greatly to imagine the panic button being hit at the IPA that their hoped for pet government is even considering a new tax. Many phone calls are being made, I presume, although the attitude to the proposal by their major donors would be good to know. I mean, is reflexive opposition to all taxes written into the IPA's constitution, or does it depend on what their current major donor thinks? The first IPA attempt at pushback appears at the AFR this morning, apparently. It's boring and predictable.

Postscript:   why aren't any economics commentators making the point about the pain to the budget bottom line that abolishing the carbon tax and replacing it with Direct Action  involves?  I bet some people at least would prefer to have no levy and a carbon price.

Also - it is completely unpredictable what will happen with populist, but ignorant, crazy man Clive controlling the Senate.  You never know - sometimes you end up with compromises that are better than the government's original deal - but I sure don't feel confident with Clive (and anyone who would follow him) in effective control the Senate.

The sooner the Palmer Party fractures, the better.  Not that it will improve certainty in the short term, but it would make them unelectable next election.

Update:  much amusement to be had watching the rending of clothes happening at Catallaxy threads like this one, too.  Boys and girls, you conned yourselves into thinking the carbon pricing scheme and mining tax were ruining the country, despite no convincing evidence.   You wanted a populist PM who would promise to remove them, forgetting perhaps that this was leaving a multi billion dollar hole in the coming budgets at a time a deficit needed to be addressed, hey?  Your IPA inspired list of things the government should stop paying for is a just a dream people will not vote for - witness the 1.8% of the vote the party most committed to small government got in the WA election.  So reap what you sow in terms of increased taxes from elsewhere, buddies.

Update 2:   Ahah - here comes the media release, this time from Julie Novak arguing that:
 ... the proposed deficit levy sends the signal the government wants to punish people who work hard to improve the living standards of themselves and their families....

Those on higher incomes in the PAYG system already bear the brunt of the income tax burden, with more than 60% of net income tax paid by individuals earning over $80,000 each year.
 Ah, so it will hurt the "aspirational".  Funnily enough, remember just a couple of weeks ago Julie was complaining about increasing the GST would disproportionately hurt the poor.

It would simplify things greatly if the IPA would just release press releases saying "new taxes? - of course we always oppose them, for whatever reason strikes our fancy at the time."


nottrampis said...

Direct action is highly dependent on budget expenditures.
guess what happens if you 'discover' a budgetary problem?

Malcolm Turnbull knew this.

This is why people at Catallaxy really support direct action because they know it will not eventuate!

John said...

Some commentators are arguing that expanding the GST base to across the board solves most of the problems. The GST is arguably the most effective and least evasive tax regime.

The government is fiddling around too much, too many changes means too many potential unexpected contingencies arising. I tend to favour the GST solution.