Friday, February 05, 2016

Taxes, etc

Paul Keating's endorsement of spending cuts may have given small government lovers a thrill, but how seriously one should take someone who was for a consumption tax before he was against it, and who had a budget cutting job in very different social and economic circumstances from the present, I don't know.  (See Peter Brent making the same point, in better detail.)

And even he thinks a modest GST increase tied to health funding is arguable.

I find all this debate back and forth a bit tedious, because I decided what is politically safe enough and reasonable back in September, and I'm just waiting for the politicians to catch on:
1.  a modest increase in the GST rate to 12.5%.   This is low enough to not really be noticed, but I'm pretty sure it still raises quite a lot.  As for its expansion - I would be inclined to leave it off fresh food, but wonder whether a reduced rate could be added to education services - say 5%?  OK, that would be a hard sell to Liberal constituents, but it might be something Labor could live with;

2.  superannuation tax concessions at the high end wound back harder;

3.  a staged reduction in negative gearing.  Not too staged.  And didn't I suggest once that it be time limited, to like for the first 5 years?   Increased turnaround in investment property sales would be good for stamp duty revenue too, as well as placing properties back on the market for potential owner/occupiers.   Someone needs to point out to me the downside, as there almost certainly would be one.  
 As for spending cuts:   it's a continual irony that Liberals and Republicans always claim there is a government spending emergency, while at the same time ramping up defence spending and using defence in some of the most expensive ways possible.

In the Australian context:   how tied are we really to the  F 35 purchase?  Why does it take a (Left) liberal (see Canada) to point out that you can get by with other, cheaper, fighters?   Is there scope to at least cut back the number we intend buying?

I would still build submarines here, though.   Forget about economic purism - supporting manufacturing abilities is a good thing, and shipbuilding seems a decent enough way to do that.

What about the cost of the paramilitary (and creepy fascistic Abbott idea) Border Force?   It would do a lot for the country's self image to dismantle it as soon as possible, especially if doing so has increased costs.

As for welfare spending:  I'm not sure if it is really worth it or not, and it would be mainly Sydney and Melbourne affected, but pensioners sitting in an expensive enough home - let's say $1,000,000 plus? - should face some formula for putting at least part of the value of their home into the assets test.

But as for taxes overall, let's not forget this point:

Update:   I've sort of grown tired of pointing out Senator Blofeld's "look at me" speeches to an empty Senate.   He isn't even proposing running again, so the publicity he craves is for just for his ego and his minuscule fan club.   Anyway, apparently progressive taxation is "immoral", despite what Popes and bishops  have maintained.


John said...

In the Australian context: how tied are we really to the F 35 purchase?

It is a dog, always was. Can't turn, can't climb, can't run. The F35 was never intended to be a stand alone fighter, it will be hopeless in an air superiority role.

Even the frigates are problematic. Surface ships are targets, too easy to kill. Only being built to save Pyne's ass. Submarines are the way to go.

The key argument against raising taxes is that it prevents investment, innovation, and economic growth. Sure, look at all those high taxing European countries. Such basket cases that they can provide free health care, free or near free tertiary eduction, have low crime rates and shorter working hours.

Not Trampis said...

You can change the tax mix to make the economy better but not increase taxes overall.
When one looks at how progressive the tax system is you look at the overall tax system not each tax.

Getting the tax ratio back to Howard levels does not mean raising taxes simply ensuring taxes rise overall with the economy as they usually do.

Spending is not why there is a structural deficit unless Abbott and Hockey did it in the last two years as both Treasury and the PBO it is all to do with taxes.

so yes taxes have to rise a bit.

Not Trampis said...

Steve, that man is an idiot.How is making a person who earns more money paying more tax immoral?

John said...

I have the suspicion that when Turnbull starts receiving persistent criticism we will see his dark side. I think people were thankful that Turnbull took over because they realised that Abbott & Co. were a pack of self righteous crush the weak neoliberals and hoped Turnbull would change tack. He hasn't, he can't because the only difference between them and him is that he is so desperate to be adored he keeps trying to hide his true economic and moral positions. He can't keep doing that, just as Abbott and Hockey came undone with that first budget, Turnbull either abandons the direction of the coalition government since it came to office or faces a public revolt.