I hope all readers had a safe and enjoyable break over the Easter weekend.
It is a great time to catch up with family and friends or to just relax, and for some of you, enjoy the four days off work.
Over the past eighteen months Joe Hockey and Tony Abbott have been constantly telling us both the Budget and our tax systems are in need of reform. Their first effort was to produce a Budget which hit the poorest in our communities hard while leaving the wealthy untouched.
Real reform will ensure that as one of the wealthiest nations on earth, those at the top are paying sufficient to ensure our living standards are maintained and our safety nets remain in place while ensuring there is more than sufficient incentive for people to work hard and achieve.
But don’t let people tell you our system is broken. We have low average tax rates by international standards and our budget deficit and debt levels are amongst the lowest in the world.
Joe Hockey’s latest reform effort came last week when he released a tax reform discussion paper. Don’t worry what I thought of it – I’ll just quote legendary Fairfax economics writer Ross Gittins:-
“The discussion paper makes no recommendations, but add up all its arguments and the conclusion we're led to is clear: to reform our tax system to cope with the globalised 21st century, we need to make changes that cause high-income earners and foreign investors to pay less tax, but the rest of us to pay more. Purely coincidentally, of course.
As well, the paper engages in a two-card trick. Hockey's first budget was rejected by voters and the Senate because it sought to fix the budget deficit in ways that were manifestly unfair: big cuts in government spending programs affecting the bottom half of households, but no cuts to the huge tax concessions enjoyed by the top 20 per cent-odd of taxpayers.
The discussion paper readily concedes the unfairness of these elite tax concessions. But it makes virtually no mention of the government's oh-so-pressing problem with the budget deficit.
Get it? In the unlikely event anything much is done about these unfair concessions, the saving will be used to help pay for tax cuts for companies and high-income earners, not to help reduce the deficit”.