Everybody it seems wants to get their quids
worth in on tax – or 48.5 pence in the quid.

BCA head Michael Chaney was on Inside Business,
the chairman of the
Nats’ tax working group, David Russell, was out there,
but some of the more interesting talk came from pols – or would be pols.

Bill Shorten was full and frank on the lurks
‘n’ perks of our current tax system on Insiders:


In terms of tax reform,
I’m making a sporting bet, Barrie, that the Howard
Government will have a four-week inquiry. I mean, how they can look at a 9,000
page Tax Act and in four weeks decide what’s right and wrong is funny. I just
think this is Peter Costello outflanking Malcolm Turnbull for Malcolm
Turnbull’s hard work last year. The real issue in tax reform is we have an
unfair tax system. Too many lower and middle-income earners are paying too much
tax and a lot of the super rich don’t pay any tax at all… My argument and the
argument of tax reformers in the Labor Party is we should broaden the base and
lower the pressure on lower and middle-income earners. But if as a result of
that, a few people in the top tax rate pay less tax, so be it, because most of
the people who should be in the top tax rate have already opted out. They use
their high-priced accountants, they set up their family trusts and family
companies are they’re not paying the same taxes as you and I…

In contrast, poor old Malcolm Turnbull wriggled
uncomfortable in the straitjacket of cabinet solidarity on Friday’s Lateline.
“We have the second worst work incentives in the Western world,” Wayne Swan
said. “When an average household works some overtime they lose $0.51 in every
additional dollar in income tax and withdrawal of payments. Every expert in the
world recognises that this is a drag on productivity, a drag on incentive. We’ve
got to deal with these issues. I’ve afraid that this review and subsequent
Government decision making will not come to grips with this important economic
priority.” Turnbull’s response?

OK, well we’ve heard
the spin, let’s get down to the facts. Wayne is saying we have
very poor work incentives in Australia and that this is the
fault of John Howard and Peter Costello. Well when Labor was in power, there
was nearly 200,000 long-term unemployed. There’s now less than 100,000. The
unemployment rate was 8.2%, it’s now 5%. In the 10 years of the Howard
Government, average weekly earnings, wages have increased by over 16%. Do you
know what they increased by under the stellar economic management of the Labor
Party in real terms? 0.3%. They barely got into positive territory.

Talk about spin! Fortunately George
Megalogenis was kind enough to come along with a few facts – and a nod to
Crikey for our contribution – when he wrote in The Weekend Australian how workers at both
ends of the scale are in need of tax relief:

The tax
inquiry Peter Costello announced this week begins with a false premise: that Australia is a
low-tax nation by the standards of the developed world… Our favourable ranking
conceals some serious problems with our tax mix…

Australia’s tax mix is
skewed heavily towards wages and superannuation, and it penalises workers at
both ends of the tax scale, the well-off and the battlers…

The irony is
the bigger problem in the tax scales remains at the bottom half, where Australia, uniquely,
imposes double taxation on its low-income earners… Australia lags behind the developed world
on the employment scorecard. Our mothers and mature-aged people in particular
are less likely to be employed than their peers in the US, Britain or New Zealand.

The tax, welfare and age pension
systems were cited as impediments to work-force participation for these groups
in documents prepared by federal and state officials for last month’s Council
of Australian Governments meeting.

Which means Costello can’t have it
both ways: claim that the tax system is generous, when COAG has already
identified it as a barrier to employment.

Peter Fray

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