Former NSW premier Bob Carr has some tips for young scribes on his blog, lecturing journalists on their job at today’s tax thingummy, which this morning segued from an initial address from Prime Minister Gillard, to a speech by Treasurer Wayne Swan, to … morning tea.

“The role of journalists during the tax summit,” says Carr (erm, we believe that’s forum Mr Carr; summit sounds too productive) “is to force the advocates of tax relief to answer the old question: where’s the money coming from for the services that nobody — just nobody — is volunteering to go without.”

The man has a point:

“When the interest groups turn up and start pleading for reductions in income tax or stamp duty or payroll tax you are obliged to ask one question: how will you replace the lost revenue? And don’t accept vague references to cutting duplication or government advertising or finding savings — as if nobody from either side of politics has thought of that one.

“You only get big licks of savings from reducing transfer payments, that is social security. Wayne Swan has done terrifically well in winding back middle class welfare but even that bought howls of protest from the opposition and part of the media.

“Demonising payroll tax or stamp duty is easy but mostly it is a knee-jerk dismissal — ‘tax on jobs’, tax on housing. Tell us the alternatives, please. The real challenge would be to take Treasury’s advice and, yes, lower the rate — but broaden the base. That would mean taxing more businesses on their payroll but at a minimal rate and leveling a tax on all homes on an annual rate but none on the transfer of homes. Easily said. But too difficult to sell. Impossible to sell.

“At least be honest.”

Honesty might be optimistic. After all, some sections of our media met the last piece of tax reform with a completely spurious “Just Because I’m Earning Over $150,000 Doesn’t Mean I’m Rich” campaign.

As Chris Richardson from Deloitte Access Economics pointed out on Radio National breakfast this morning, there is a broad degree of consensus amongst economists around what needs to be done: abolishing many state taxes, examining insurance taxes, improving GST, superannuation, and property industry reforms like reassessing capital gains tax and stamp duties to name just a few.

The kicker? “Both sides of politics are much too busy wrapping each other’s hands around the other’s throats and squeezing hard … As soon as anybody says ‘yes that’s a good idea’ the other side jumps on it … it’s easy to demonise.”

Cold hard tax reform would be sweet, but in this environment, with a government cowed by a feral opposition and interest groups that publicly howl down any kind of move, maybe tea ‘n bikkies is the best we can hope for …

Peter Fray

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