Hillary will treasure the Treasurer if he dishes up some of these goodies on Tuesday.

“All must have prizes,” the Dodo declared at the end of the
Caucus-race in Alice – and with all the polls suggesting the Howard
Government is going the way all the dodos went, the Prime Minister is
thinking in similar terms.

“All must have prizes” has been the theme of the leaks – and the announcements – in the lead up to next week’s Budget.

Prizes
are nice – but decent policy is even better. Especially when you
remember that the only prize we get from the Howard Government seems to
be pork.

“Mmmmmm. Pork.” Fine if you’re Homer Simpson.
Some of us have slightly more refined palates. We’d like to have some
finely finished quenelles of tax reform with a drizzle of
intergenerational equity on top offered up to us – and that just as an
entrée.

Silvio Berlusconi announced recently that he plans
to reduce his country’s top tax rate to just 33 per cent. Yum, yum! No
wonder everyone seems to like Italian.

However, not even
the army catering corps could have come up with something worse than
the stodge the Howard Government has served us. What have they offered?
Political and economic bully beef. The highest taxing government in
Australia’s history.

Everybody, of course, has different
ideas about what should be on the Budget menu. Earlier this week, ABC
Radio’s World Today got very excited about the economic equivalent of
one of those food fads that never go away, like the idea that living
off cabbage soup is good for you:

“Surveys are consistently
showing that Australians would prefer the Budget surplus to be spent on
improving services such as health and education, rather than on tax
cuts,” political correspondent Catherine McGrath gushed. “Today, a
coalition calling itself ‘services first’ has launched a campaign in
Sydney to promote that idea…”

Yeah, yeah. If you ask people
if they have the eating habits of Mr Creosote – the, er, gourmand from
the restaurant scene in Monty Python’s The Meaning of Life – of course
they’re going to say no. But that doesn’t mean that they don’t want
variety in their economic diet.

Well, today a menu from the
Centre for Independent Studies arrived in the mailbox – a carte d’hotel
of gourmet policy that certainly whetted yours truly’s appetite.

While
it’s always a bad sign when chefs get too wordy describing what they’re
offering up, this writer was positively pleased perusing the CIS’
introduction. There was scarcely a superfluous word:

“For
too many people it does not pay to work. Higher income earners pay more
tax than almost anywhere else in the Western world, and lower and
middle income earners face vicious Effective Marginal Tax Rates, as
high income tax is exacerbated by the loss of means-tested family
payments. In a paper to be released on Thursday 6 May by The Centre for
Independent Studies, Tax Reform to Make Work Pay, Professor Peter
Saunders and Barry Maley argue that the only logical solution is to
raise tax thresholds and stop means-testing family payments”.

Saunders and Maley are offering up an eight course banquet. Let’s quote what’s on offer:

* The top rate of tax should be reduced to 40 cents in the dollar as the first step towards achieving a flat-rate income tax.

*
The top rate threshold should be raised at least to twice the mean
level of earnings (approximately $94,000) and should be indexed to rise
every year in line with inflation.

* Raise the personal zero-rate threshold to $12,500 and index it annually to rise in line with average wages.

*
Where they wish to do so, a couple should be permitted to opt for joint
taxation with a shared zero-rate threshold of $19,500. This threshold
should be indexed to rise with average wages.

* All
families with dependent children should receive a non-means-tested
Child Tax Credit to the value of $3,000 per child per year. This credit
should be indexed to rise each year with the average wage.

* Abolish all existing means-tested family payments.

*
Reform the eligibility rules for Parenting Payment, NewStart Allowance
and the Disability Support Pension to reduce the number of claimants
and require work where it is appropriate to do so.

*
Compensate those who lose most net income from these reforms by making
a supplementary payment to parents with children under school age.

Tasty treats!

Here’s what they’re thinking out in the kitchen:

“’If
you are earning between $25,000 and $45,000, it can sometimes feel as
if the government simply does not want you to work harder and raise
your income.

“Something needs to be done to reduce the
crippling disincentives in the Australian income tax system. Leaving
things as they are should not be an option.”

You can read the menu for yourself at www.cis.org.au/publications/policymonographs2004/pm62.pdf

It’s not a fully balanced meal – it doesn’t tackle the current over-indulgence in gingerbread houses, for example.

But
if the Treasurer dishes up something even half as good next Tuesday,
yours truly will happily declare that he’s hunkier than Jamie Oliver.

Hillary Bray can be contacted at [email protected]

Peter Fray

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