Monday, October 10, 2011

Tax Forum? D'oh!

Last Tuesday 04/10/2011, watching "our" ABC's 7:30, reporting on the Canberra Tax Forum summoned by the Federal Government, I've heard this:
"STEPHEN LONG [reporter]: There was indeed an extraordinary consensus at the Tax Forum, on the left and the right, that at least for the long-term jobless, the unemployment benefit is too low, and some of the comments would have been the last thing the Government expected.
"JUDITH SLOAN, ECONOMIST: I do think that issue about the gap between the Newstart Allowance and the other pensions is an enormous one.
"STEPHEN LONG: Professor Judith Sloan said the low payments hit older workers hard, as they're unemployed for three times longer than the average.
"JUDITH SLOAN: We have to understand that the dole, unemployment benefits, Newstart, was there as a short term transitional payment, but if people are unemployed for a long period of time, the issue of adequacy really becomes important - and, indeed, their ability to successfully find employment becomes important. There is going to have to be something done.
"STEPHEN LONG: Let's put those views in context. Professor Sloan's no bleeding heart. She's a prominent libertarian economist: free market leaning, dryer than dry, a champion of labour market deregulation. If she's saying the Newstart Allowance is inadequate, demeaning and doesn't help people get back to work, sit up and listen. Comrade Jeff Lawrence, president of the ACTU, was amazed by his unlikely bed fellow."
(See here).
I must admit, I was every bit as shocked as Mr. Long: don't get me wrong, the so-called Newstart Allowance (aka dole) had been kept at misery levels since forever: "If you had an unemployment payment and rent assistance, after you paid your rent you would have $16.50 a day for everything else and looking for work," said former OECD economist Peter Whiteford of the Social Policy Research Centre, UNSW. (See here)

So, that isn't really news. What surprised me is that experts like Prof. Sloan finally learnt of it.

But the surprise was short-lived: "Community Services minister Jenny Macklin said she understood the concerns but hoped delegates understood 'the budgetary issues that we face'."

That's the thing with tough Government decisions: these guys have such a hard time making your life shit. You've gotta understand her.

No More Mr. Nice Guy

So, Tuesday big business was so nice to ask loudly but not forcefully for a higher dole (and pushing quietly for corporate tax cuts), while the Government was taking tough decisions.

By Wednesday things changed a little:

"ANDREW ROBERSTON [reporter]: With debate today centring around personal taxes, Dr Henry [former Treasure secretary] said they should be fair. Business lobby groups that yesterday called for a cut in corporate tax rates today argued for a cut to personal income tax rates too.
"GREG EVANS, POLICY DIRECTOR, ACCI: 'Well, ACCI welcomes the proposed reduction in the company tax rate; it is a significant area of unfinished business that we need to more closely align the top marginal rate with the company tax rate'.
"ANDREW ROBERSTON: Unlike the company tax discussion, though, debate about personal tax wasn't completely along ideological lines. Investment banker Mark Carnegie argued strongly that the top 15 per cent of earners should pay 15 per cent more tax."
(See here)
Well, they didn't change, except for this:
"MARK CARNEGIE, MH CARNEGIE & CO: The number of individual winners in Australia is shrinking all the time. The economic rents of capitalism are shrinking to a smaller and smaller group of people. Unless those people are willing to stand up and say, 'We will shoulder some of the societal responsibility', we will be facing the sort of nightmare that Europe and the US has at the moment."
Who would have guessed, an investment banker talking about inequality is unusual enough. But talking about economic rents and on top warning about social unrest? Holy Mother of God! I am discombobulated, but I imagine Chris Berg must be speechless,

Then came the talk about the tax-free threshold (which I already mentioned here):

"The Treasurer, Wayne Swan, said the government's first priority was to lift the tax-free threshold to $21,000, which would deliver every wage earner a modest tax cut and free 1.2 million people from paying any tax. It would be worth about $500 for someone earning $60,000. [Not quite woo-hoo but better than nothing, you'd say].
"The threshold, now $6,000, was scheduled to rise to $18,200 next year and $19,400 by 2015 as part of the compensation arrangements associated with the carbon tax.
[What?!]
"Although Mr Swan said the increase to $21,000 would occur 'when we think it is affordable to do it', it is likely to be implemented before the next election.
(...) [D'oh!!] (See here)
And, there's a little detail: they will increase the tax-free threshold to $21K (eventually, you'll understand), but will also eliminate the low-income offset... Moda Fukami!!! (that's supposed to be Japanese for "d'oh". Don't ask me; I don't speak Japanese: Homer and Bart do).

And now we see how pressing those "budgetary issues that we face" really are:

"ANDREW ROBERSTON: The forum ended with the Treasurer announcing a working party to investigate reform of business taxes [aka tax cuts].
"WAYNE SWAN, TREASURER: The purpose of that business tax reform working group is to bring together business leaders, tax experts, unions. It will be supported by the Treasury."
(Emphasis added)
Mind you, the idea is to have experts and technocrats discussing serious matters, for the greater good, in a calm, cool and sober atmosphere, away from the prying eyes of those who, like us, have little to contribute to the discussion, and whose only role is to pay taxes.

But you understand, don't you?
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Anyway, keep voting Labor or the Coalition: I'm sure they'll do the right thing... after they deal with those "budgetary issues that we face".

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