May 18, 2012

Keane’s fantasy budget (and how to pay for it)

Removing middle class welfare and tax reform would deliver a health surplus while addressing some key economic problems.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Yesterday we looked at the major economic challenges facing the country, with the goal of putting together a budget that addressed them, free of political self-interest.

Today we’ve had a go at putting together a series of budget measures aimed at addressing the issues of decarbonisation, housing supply, infrastructure provision and long-term fiscal stability. Let’s go through them.

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87 thoughts on “Keane’s fantasy budget (and how to pay for it)

  1. ConnorJ

    Vote #1 Crikey in 2013!

  2. Peter Ormonde

    Yep – wouldn’t it be nice – a technocracy run by pundits … make doing the right thing so simple.

    Some of these suggestions are both economically and socially sensible – lbut some, ike the GST on food, are politically suicidal.

    So one would need to set up some sort of compensation for those on low incomes… so knock a bit off the revenue side there.

    But spread the GST to food just to feed the states???? Because they aren’t hauling in as much in stamp duty and other insane taxes they impose on employment and the like? No BK – let the states eat cake I reckon.

    But all up 8/10

  3. Jimmy

    Generally happy with all the suggestions but I can’t see a banking super profits tax working, not only does it not have the logical nexus of “they are using our mineral and need to pay for it” of the MRRT, but as the banks have already broken the link between RBA rates and what they charge the tax will merely be passed on in the form of higher interest ratres on loans and lower rates on deposits.

    As for the courage necessary, well the current govt has brought in a carbon tax and MRRT, means tested private health, restructred FTB and other middle class welfare. initatiated the “builidng better cities” policy and the regional cities program so just because they aren’t doing everything you suggest doesn’t mean they shouldn’t get credit for the courage they have shown, especially when their policies are contrasted with what an Abbott govt is planning to do.

  4. Phen

    Its just silly populism to claim that the rebate of diesel fuel tax shouldn’t apply to miners. The principle that use of diesel fuel in machinery and in mining equipment shouldn’t be linked to a tax intended to fund public roads is at the heart of this tax.

    Like most of the other ideas though.

  5. Joe Magill

    It’s a great start Bernard.
    I wonder whether a phase out (over say 5 or at a stretch 10 years) of negative gearing would be politically achievable in light of the other measures proposed. A primary objective should be to remove the distortions that the tax regime creates.

    Peter Ormonde, the states do have a real revenue shortfall problem and a rising expenditure obligation. This has to be addressed if we want to maintain reasonable services. The GST removed a raft of inefficient state taxes and if we don’t fix the state problem we will only encourage their replacement. Someone has to pay for the schools, the hospitals, the police.

  6. Jimmy

    Phen – Very true, but how much of the taxes on fuel actually go to roads these days?

  7. Mark Duffett

    Yes to Phen. In any case, what’s the rationale for “removing the diesel fuel rebate from miners and transport, while keeping it for agriculture”? People might not need the products of the former quite as much as the latter, but they come a pretty close second.

  8. Mark Heydon

    @ Jimmy
    Logic for a banks super profit tax (in my eyes at least) is that the big banks are effectively backstopped by a government guarantee. The rating agencies have stated that they effectively mark the banks’ credit ratings up a couple of notches as a result, which gives them access to more and cheaper funding. This shouldn’t come cost free. Though I agree in the current uncompetitive banking market any additional tax would likely be mostly passed on to customers.

    On another note, I reckon there are a number of tax issues that could be looked at, for example the 50% discount on capital gains and the use of family and other trust structures to split income.

  9. Jimmy

    Mark Heydon – I acknowledge the “govt guarantee” concept but the tax attacks the issue from the wrong end. We need to make smaller banks and credit unions more attractive.

    Personally I do all my banking through what was the VTU credit union (now mutual bank) and have had much better interest rates than anything the big banks offer.

  10. lilac

    Off topic I know and I apologise but finally Tony Abbott, Kathy Jackson and Michael Lawler were outed in a brilliant piece of investigative journalism yesterday in the Independent Australia.
    The article also raises questions of the Slipper affair.

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