Sunday, February 07, 2016

More about taxes

On Insiders this morning, PM Turnbull seemed to be following the line taken by John Quiggin that a GST increase, once you take into account the compensation to low income earners that would be needed for political palatability, probably doesn't raise money enough to make it worthwhile.  Chris Uhlmann reckons that an increased GST is already "dead, buried and yet to be cremated."

I suppose it does all depend on the amount of compensation.  But a few things:

a. that's why you go for the modest increase of 2.5%, not 5%.  You can get away more readily with inadequate compensation that way;

b. everyone's forgotten, but should be reminded, that pensioner compensation for the carbon tax was actually designed as over-compensation.  Tony Abbott (illogically, given the budget repair emergency he was also arguing) sold it as a "positive" that he was removing the carbon tax, but keeping the compensation.   In light of this history, a responsible government could argue for more modest compensation for pensioners for a GST increase;

c. if you keep the GST off fresh food, a government can also argue that, more than ever, there's an incentive for welfare recipients to move off processed food to more fresh food in their diet.  Hey - add a sugar tax on soft drinks, and you have an even better set of nudges towards welfare dependent families changing their diet! 

But, yes, it does appear that no politician is following my opinion, after all, despite the polling indicating that a GST increase to 15% has a 37% approval rating, and (obviously) that's before our charming PM has even tried to sell it.

Those figures indicate that a well argued case would easily see the Coalition being returned at the next election as the "responsible" side in repairing a the budget, with Labor as stuck in the past.

But no, let's avoid a relatively simple and obvious way to raise more revenue for another 3 years or so.

1 comment:

John said...

Turnbull threw Scott Morrison and Mike Baird under a bus. The same behavior: he lets others sacrifice their political capital and then comes in as some sort of saviour.