“Costello asking wrong question,” asserts George
Megalogenis
. “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 overall tax burden may seem modest when
compared with Britain or continental Europe, but our favourable ranking conceals
some serious problems with our tax mix.”

“We happen to slug our workers more heavily than
most nations, through the taxes on wages and on retirement savings. But our
consumers, businesses and property speculators pay, respectively, lower GST,
company, payroll and capital gains taxes than is the norm
overseas.”

If the current inquiry confirms these facts: “…
two political conclusions follow: the electorate should get ready for a cut, or
even abolition in the top personal tax rate of 47%, and for reform of
the taxes on super. As it happens, these are the very options the Treasury
department has been exploring over the past three months, long before Costello
called on business chiefs Richard Warburton and Peter Hendy to compare
Australia’s taxes with those overseas.”

Of course there is that little question of
intertemporal equity – “Ha!” I hear you cry, “here comes the special
pleading”. Not at all, gentle readers, I shall just point out the severe
intertemporal inequity of the likely reform, which Henry pushes for despite the
personal inconvenience.

Henry and other boomers have paid an excessive rate
of income tax all their working life, and have had their retirement savings
slugged upfront, on the way through and at the end. These are the taxes that
will be cut. In return, Henry and his boomer mates will cop the higher taxes on
their retirement activities, such as eating and drinking. This will keep us at
work, of course, and it will be Cossie’s fault if his aging boss decides he has
to work on also.

Read more at Henry Thornton.

Peter Fray

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