Wednesday, November 11, 2015

I repeat my formula for Bill and Labor

I think it would be a trap for Labor to oppose any increase in the GST.   It also seems doubtful that they can do enough to increase revenue quickly enough (yes, Australia needs to both increase revenue and be more careful in spending) via superannuation tax concessions and welfare related changes (welfare restrictions not being Labor's strong point, exactly.)

I therefore repeat my common sense call:   compromise with a GST increase to 12.5% - it's sounds much better than 15% - and look at increasing its scope modestly.  Don't go overboard in compensation for the poor.   Also make changes to superannuation concessions.  Make changes to the negative gearing rules that ease in over a few years, don't try to do it in one big bang.

You might even get away with a modest carbon tax replacing Direct Action, but that is riskier, 'cos folks are too, too easily confused on this.  On the other hand, Labor has plenty of ammunition from Turnbull's own mouth as to how Direct Action can't work in the long run, and it is a hit to the budget bottom line.   (The problem is, of course, that just as Labor is too easily motivated to make a scare campaign of any GST increase, the Coalition is too easily motivated to do the same for any carbon pricing scheme.)

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