Christian Kerr writes:


SMH economics commentator Ross Gittins is
even more entertaining than usual as he talks tax this morning. “One man’s give
is another man’s take”
he writes, looking at the various interpretations of the OECD report Taxing
Wages from last week.

He’s being
helped along by the other broadsheets today. The Australian tells us how
“sparing mining export prices and
signs of a resurgence in the economy are likely to give Treasurer Peter
Costello a record budget surplus of up to $16 billion, increasing the scope for substantial tax cuts”.

The
Age
,
however, says the “scope for tax cuts in next month’s budget will be
limited by a large drop in the size of the surplus next year as
the global commodity boom unwinds and company profits slow, Treasurer
Peter Costello
has warned”. One man’s give is another man’s take. Except perhaps
Gittins shouldn’t have used gender specific language.

Federal Sex Discrimination Commissioner Pru Goward is urging changes to
the tax system to help families where both parents work part-time, the ABC
reports.
Goward says under the present scheme, stay-at-home parents are entitled to
advantages from family tax benefit B.

“If family tax benefit B were changed from being one full time and one
not in the work force, to one full-time equivalent parent, that would make that
family entitled to it,” she says. “Because then I think you would see families
where the man wasn’t working 40, 50, 60 hours a week to enable her to stay home
to get family tax benefit B, and it would be possible for them both to keep their
toe-hold in the work force.”

That’s an interesting follow up
to yesterday’s Australian report on unpublished OECD research showing
Australian mothers are less likely to work than in almost any other
developed country because of generous family tax benefits and limited
childcare
options.

And we
shouldn’t forget the comments shadow finance minister Lindsay Tanner made to a
Centre for Independent Studies policy forum a few weeks ago: “In 2003-04, Family Tax Benefit B was paid to 38,500 families
earning over $100,000 per annum, and 76 families earning over $1 million per
annum.”

So much
about who works, who can work and who has an incentive to work goes back to
that tax/welfare/family knot politicians only seem prepared to pick at.

Gittins
ends up talking about family tax benefits. “John Howard protests there’s no
easy answer to this problem, and he’s right. But it’s the greatest single
weakness in our tax system, and if the budget makes no attempt to reduce it
this will be a sign of a Government that’s stopped trying.”

Is it too
cynical to suggest that instead all we’ll see in the Budget is an increase in
the income level where the 42 cents in the dollar tax rate cuts in so that more
people are on 30%?

Peter Fray

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