John Menadue. The fake discussion about state taxes.

Apr 4, 2016

Malcolm Turnbull’s ruse is obvious. He wants us to forget all about deficits and debt and the need for budget repair. To avoid these issues, he now tells us that if we want improved health and education services, we cannot have them because the states have refused his offer on state taxes and he will not increase commonwealth taxes.

But we know that large increases in commonwealth government revenue are possible without any increase in income tax rates.

There are numerous proposals on ways to increase revenue without increasing tax rates. The most recent was from the Committee for Economic Development of Australia (CEDA). That Committee suggested various ways in which revenue could be increased without increasing income tax rates.

  • Reducing the superannuation concessions.
  • Reducing the capital gains discount
  • Halving the fuel tax subsidy scheme.
  • Removing negative gearing.
  • Removing the private health insurance rebate exemption.
  • Reducing industry tax concessions.
  • Reducing work-related deductions.

The other obvious way to increase revenue is to ensure that large multinational companies, private companies in Australia and trusts pay their fair share of tax. Many don’t pay any tax at all.

None of this involves increasing tax rates. But these proposals would not be welcomed by the wealthy vested interests that support the Liberal Party.

There is probably $20 b. to $30 b. of increased revenue per annum by addressing the issues above.

All public surveys that I have seen suggest that Australians are prepared to pay increased tax, even increased rates of tax, if they believe that the tax system is fair and the money is spent efficiently.

I have posted blogs earlier about the remarkable successes of the Nordic countries – Denmark, Sweden and Norway. These countries have some of the most successful economies and societies in the world yet they have very high rates of taxation. The Nordic countries have a basic trust in government. They broadly believe that the tax system is fair and services are efficiently delivered.

It is something badly lacking in Australia.

See links to two earlier articles on the Nordic successes – Postcard from Denmark on the Nordic success (17/1/2015);  Why are the Nordics so successful? (18/1/2015).



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