Christian

Kerr writes:

“Most Australians want John Howard to stay on as Prime Minister for
at least several more years and contest the next election,” according
to a poll splashed across the front page of today’s Telegraph.
Actually, they’re New South Welshpersons, not Australians – but we all
have our Sydney or the bush moments. And what’s more interesting is the
second line: “As Mr Howard celebrates 10 years as Prime Minister this
week, few voters wish to embrace Treasurer Peter Costello as his
replacement soon.”

Cossie’s GST spit in the
Weekend Oz
was hosed down in the Sun Herald by “friends” – friends who sound like those “friends” of Brangelina who get
quoted in Hello! – describing the report as “a complete beat-up”. Yet that same morning, in the News Limited Sundays, Glenn Milne had an
exclusive on Cossie’s plans for tax reform – and then the great man himself let
rip on Insiders.

Not one, but two big shindigs are planned for parliament this week to
celebrate the 10th anniversary of the election of the Howard Government – and
is the number two man feeling overlooked? Feeling that it’s time to get assertive?

We’re now going to have a five-week comparison study of Australian and
foreign tax systems that can act a springboard to personal and business tax
reform. Five weeks? Sounds as if it will be really detailed. A quick flick
through my Filofax says we have just 71 days between now and the May 9 Budget.

The Treasurer might be feeling overlooked, but he’s also overlooked a
few basics. As Kim Beazley observed on the Sunday program :
“Today, after 10 years as treasurer, he’s talking about an inquiry into the
taxation system. He’s collecting $100 billion more now than when he first
became treasurer.”

But this is where it gets interesting. Has Costello been a frustrated
reformer? Does he have a few grand plans tucked away in his sock drawer that
have been rejected before? We know, for example, that Treasury secretly costed
plans for a flat tax and a top marginal rate of just 30% thanks to the
intrepid work of The Australian‘s Freedom of Information editor, Michael
McKinnon.

The Prime Minister burbled away on tax in the SMH‘s
“Happy John” 10th anniversary piece on the weekend:

Although
he is clear he would like a further round of tax cuts, he firmly plays down
expectations of “gigantic tax changes”, especially if they were to be
at the expense of his cherished system of family benefits, which has
dramatically eased pressure on low-to-middle income families.

“As
to further reforms, I think you understand if we have room to move we’ll do
so…but we’ve got to preserve a sense of reality about what can be
achieved,” he says.

“So
much of what I read about gigantic tax changes involves sweeping away the
family tax benefit system. Well, that
is not going to happen on my watch.”

The PM seems to rather like the tax system as it
is. He seems to like welfare churn, he seems to like the family tax benefit, he
seems to like the fact it’s not means tested and he seems to like the way it
discourages mothers from returning to work. It’s his baby – no pun intended –
all part of his massive social engineering project to build the new Wollstonecraft
in this green and pleasant land.

Does his Treasurer disagree? Is he finally thinking
tax reform might let him make his mark. Consider some of the tax truths outlined in The
Australian
– how Australia’s top tax rate is one of the highest in the world, as are the
marginal rates paid by the poorest income earners trying to move off welfare.
Or the details in the Courier Mail,
which indicated Australia’s reliance on taxes on personal and
corporate incomes was distinctly higher than OECD averages.

So is this serious or not? The Treasurer says the study “will make no recommendations about the requirement, direction or
consequences of tax reform, instead focusing on delivering a series of tables
ranking Australia’s competitiveness across the
spectrum of taxes.”

If that’s all they’re going to do it won’t take long. They can just
copy and paste from the Joint Economic Committee United States Congress
report of April 2004: How Competitive is the US Tax System?. That benchmarks against Australia.

By the time they report, Costello would have already had two years to have done something based on that.

Peter Fray

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