taxes

It seems that tax cuts are all the rage with the PM praising Trumps bold initiatives and vowing to push through similar (but smaller) cuts in Australia. Bill Shorten, while not opposed to this form of pea & thimble trick has tentatively suggested that the the government ought to say how these cuts could be funded. Well the answer is all there in the history books. Ronald Regan while not the first to use tax cuts was however the one who tried to justify it by claiming the cuts would so boost the economy that tax revenues would increase even more than the loss incurred by the cuts. It became know as trickle down economics which then morphed into voodoo economics when it was found that the national debt had doubled. To his credit John Howard learnt two things from this débâcle - tax cuts win votes and any problems created will be inflicted on the next government.

So he went in boots and all with a wide range of tax cuts to get maximum voter appeal. He introducing the over-60 superannuation tax holiday and other super concessions, family payments to middle-income households, age-based tax concessions, lots of income-tax breaks for middle to higher-income households and introduced the capital-gains-tax concession; bolstered the first-home buyers' grant; and boosted immigration, particularly skilled immigration which not only reduced the need (and cost) for local training but put pressure on housing demand. In education, he dramatically increased federal funding to private schools, and cut funding to public schools with the result that the number of public schools has actually decreased (58 in 10 years) despite a rapid rise in the number of students.

Supporters of this policy argue that Howard left the nation with a sizeable government surplus which is not quite correct, the actual surplus amounted to only 7.3% of GDP , about half of that held by Chile , a tenth of that in Finland and a twentieth of that of Norway This was a dismal performance considering Howard had the benefit of the minerals boom which boosted government revenue by $334b over the years 2004 to 2007. There was also the sale of assets like airports the National Rail Corp, Dasfleet, Telstra, the remaining share of the Comm. bank and many other valuable enterprises which yielded another $72b. In a somewhat bizarre move they also flogged off nearly all the nations gold reserves, 167 tonnes of it, for $306 per ounce just before the gold price more than tripled. Despite their mantra for lower taxes the Howard government introduced the GST which reduced the burden of providing federal funding for the states by $44.38b in 2007/8 .

Unfortunately the tax cuts made plus those promised by Howard at the 2007 election were matched by Rudd and will be extremely difficult to reverse by any future government which will have to find alternative revenue sources or make even more spending cuts. Malcolm Turnbull intends to put the medicare levy up from 2 to 2.5% , has cut 15,000 public service jobs since 2013, slashed university and even medical and scientific research funding with 700 full time jobs lost in this sector. He has now announced that he intends to cut the corporate tax from 30 to 25%, a move that will cost $65.4b over 10 years. Unlike the Howard years Turnbull is introducing these cuts at a time when the government has a budget deficit of $33.2b and is doing so without explaining how they will be funded. But like any politician he put a positive spin by saying the tax cut was a way of “putting more money into people’s pockets” and the Government’s priority was to “lower middle income tax rates”. He then added that there was “no doubt” taxes in Australia were high, an assertion contradicted by the Organisation for Economic Research and Development (OECD) which put Australia near the bottom at 28th out of 35 nations.

Putting money in peoples pockets does sound attractive and its possible that some corporations would use the tax cut to increase shareholder dividends. But what happens then? If the lucky shareholder decides to buy some new gadget on line the net result is a higher import bill. Alternatively if the corporation decides to spend the tax windfall on increasing their productivity with new equipment the import bill goes up and employees risk becoming made redundant by the new technology. Not exactly a win-win situation.

The Intergenerational Report's (IGR) predecessors assume that the answer to our future prosperity lies in the combination of population growth, productivity and participation. After an almost unprecedented 24 consecutive years of economic growth, we certainly have achieved population growth, productivity is declining, there's record high unemployment, but where's the prosperity?

Download the summary

The report says that to drive higher levels of prosperity through economic growth, we must increase productivity and participation. If we are to achieve these goals we need to encourage those currently not in the workforce, especially older Australians and women, to enter, re?enter and stay in work, where they choose to do so.

Federal Treasurer Joe Hockey laments that by 2055 around 22.6 per cent of the Australian population will be aged over 65 and that there will only be 2.7 people of traditional working age to support the older population.

... the Intergenerational Report shows the growth in the costs of many services, especially in health, that will put pressure on the budget and threaten the sustainability of those services. Every day our spending exceeds Government revenue by more than $100 million. To make up the shortfall we have to borrow that $100 million per day.

If spending exceedes revenue, surely it's time to reconsider and redefine what's meant by "economic growth"? Family or individual households can't be maintained in this manner, and neither can businesses.

Income tax and goods and services tax, and taxes on superannuation – the taxes that affect us – will have to climb in order to fund the things we are going to need!

Beyond 2017-18 Commonwealth grants to states for hospitals will increase only in line with the population and the consumer price index. But the cost of running hospitals is continuing to climb. Not meeting that cost is unrealistic (unless the states meet it by doing something such as lifting the goods and services tax) but it holds back the projected deficit.

SMH> Intergenerational report how labor was framed

Australians could face record taxes in order to balance the budget if the full suite of government’s economic measures are not put in place, according to the recent intergenerational report!

But the future of the Australian workforce will mean Australians will need to work longer and harder over the next 40 years in order to sustain the nation’s economy.

Productivity

David Richardson from the Australia Institute questions our Treasurer Joe Hockey on the importance of workforce participation and technology and the role that health technology. By implication, education is going to play in economic growth into the future productivity, but none of those things are in the Intergenerational Report. It's assumed that productivity growth is 1.5 per cent for now and for ever, no matter what. Tertiary education, and skill training, is becoming prohibitevely more expensive, and based on a business model - hardly encouraging productivity and cutting-edge innovation!

While the recent Intergenerational Report references how technology is changing our lives it failed to properly quantify the shrinking correlation between future productivity gains and job growth. The Intergenerational Report expects Australia's past level of productivity growth to carry on into the next 40 years, largely on the back of technological change and innovation. On the contrary, our big exports of education and housing are hardly productive, and manufacturing is declining.

High immigration may have no effect on productivity, as data shows, or as the Australian experience suggests, may reduce it. And it can be irrelevant to participation.

Participation
Participation refers to how the workforce can allow people to work later in life, as well as how workforce options and flexibility can build the participation of more young people and women. So apart from population factors, participation and productivity hold the key to future economic prosperity.

Currently, three fifths of our population increase is through migration with only two fifths from natural increase, so it’s already pretty high by historic levels.

The IG report notes the importance of migration to the country's economic performance acknowledging over the years, migrants "tended to be younger" than the resident population and therefore "helped push labour force participation rates". On the contrary, unemployment within migrant groups is higher than averate, and migrants actually don't stay "younger" but age at the same rate as everybody else- one year more per year!

Population

Australia's population growth rate has increased above historic trends, largely due to immigration. Since the Sydney Olympics in the year 2000 the population of Australia has grown by 25 per cent. The ABS predicts population will be around 40 million in 2061 and up to 70 million by 2101.

Dr Jane O’Sullivan, of Queensland University, makes the point that each new person we need to spend at least $200,000 on infrastructure. (Some would say more like $500,000). Rather than producing prosperity, our unwieldy economy is costing more to maintain.

Australia will become even bigger, denser, and more multicultural over the next 5 years. Some ‘Aussie Dreams’ may start to disappear such as the ‘quarter acre block’ and along with it the Hills Hoist garden shed and enough space for a game of backyard cricket. People are to be more crammed together, for the benefit of "economic growth"? If lifestyles can't be maintained, then who benefits?

McCrindle- population growth in the media

Our economy is staggering under the weight of heavy demands, yet illogically it's assumed that we can "offset" our ageing population's costs through high population growth?

A growing number of voters say they would now support an increase in the rate of the GST, following a year in which the tax has been a simmering political issue. The Abbott government on Thursday revealed plans to subject downloaded music, movies and books to the GST in what Federal Treasurer Joe Hockey calls an 'integrity' measure, not a broadening of the GST. So, welfare is being cut, piece by piece, and taxes are increasing. Where's the prosperity?

Experience shows us that rapid population growth is no guarantee of economic prosperity, and conversely a stable population does not doom a country to economic failure.

Fire taxes and people taxes - Are we seeing the genesis of what could well be the next tax imposition for the people of Victoria to pay for the population growth that the state forces on us?

It’s been clear for many years that population growth is costing us all big time in Australia and that’s just the money side of it. I’ll set aside the impact of population growth on the environment, the welfare of other animals, our amenity and livability for another discussion.

About 10 years ago, it dawned on the people I know that population growth was not just something that happened on the outer fringes of the capital cities where we never go but that it was pushing its way into the established suburbs. At first, relatively unnoticed but as the rate and volume increased, we all watched in dismay as neigbouring suburban gardens disappeared, houses were demolished for larger, bulkier edifices and our familiar mix of built and un-built environment was transformed into something that would be unrecognizable to anyone who had been absent for a decade. The word “infrastructure” then insidiously crept into our media lexicon ad nauseum. Services such as sewerage and roads and provision of power that we took for granted as being provided by various arms of government suddenly seemed to be in a crisis of ageing and inadequacy. We all knew that there was a cost to this, ultimately payable by tax payers, but most people I spoke to saw this as being long into the future to the point they did not need to worry about it.

Dr Jane O’Sullivan http://www.onlineopinion.com.au/view.asp?article=10137 in March 2010, highlighted and quantified the inevitability of this burden with a reasonable assumption that the average lifespan of infrastructure would be conservatively 50 years so that on an annual basis this would amount to no more than 2%. If population growth is 2%, as it had been around the time she wrote the article, then the infrastructure capacity must be doubled! This is the position our growth obsessed governments are putting Australian citizens in.
The last growth figures (to March 2012 on the ABS website show a national growth rate of 1.5%) but this is still very high for a developed country. Victoria had the largest numerical increase in population in that year of any state- 82,500

So, the next blow to Victorians is that a planning academic called Roz Hansen has suggested to the state government that they impose a levy based on the value of people’s properties (and therefore adding to house price inflation) to pay for the additional infrastructure necessitated by population growth. This might be OK for someone like Roz Hansen, who we might reasonably assume has a hansome salary as planning adviser to the Baillieu government, but for people on retirement incomes living in ordinary suburbs, it could well mean not being able to afford to stay in their homes!

The Premier is in the clear so far, having said “no” to this idea. It is now on the agenda, however!

The Municipal Association of Victoria does not want the collection of such a tax to be imposed on councils and points out that people do not have unlimited resources. Victorians will also be paying a fire levy from July 2013 and the government proposes doubling the population of bushfire prone townships such as Warrandyte and urban suburbs by allowing 2 houses per residential lot.

Any tax based on the price of a property can become unaffordable to the resident as population growth drives up the price of housing without creating any more real wealth. Although the Georgists http://en.wikipedia.org/wiki/Georgism advocate a tax to property owners based on land value, in a “Geoist” world there is no income tax on wages. Hansen’s suggestion is Geoism without the benefits, although I doubt that this would be a conscious all encompassing tax philosophy on her part. She would still expect us to pay income tax with land-tax a new and additional impost.

What is frightening is that the population growth that drives such draconian potential policies is inflicted upon Victorians against their will, but our political system seems to provide us with no means to stop what over 70% of Victorians manifestly do not want. If a related new tax or charge is imposed, we also have almost no chance of stopping it, since such things tend these days to be decided in parliament, between elections and never to be submitted as items on political platforms at election time. And who can keep up with the sophistry? Isn't there more to life?

They say a week is a long time in politics but in Victoria a day is a long time.

They say a week is a long time in politics but in Victoria a day is a long time. Community members tracking the progress of the Planning and Environment Amendment (Growth Areas Infrastructure Contribution GAIC) Bill have been stunned at the mercurial changes in policy exhibited by Planning Minister Justin Madden in relation to this Bill. A month ago Minister Madden was saying that he expected the planned expansion of the urban growth boundary by 43,600 hectares to be the last expansion in his lifetime. Yet a week ago he was conceding that there may have to be changes to Melbourne's urban growth boundary. He made the excuse that his not-in-my-lifetime comments were about major changes to the outer urban growth boundary not just little amendments.

Julianne Bell Secretary of the Protectors of Public Lands Victoria Inc. commented:

“We have been taking a great interest in the progress of this Bill. If passed it will change the face of Melbourne forever and irrevocably affect the lives of many outer suburban/rural land owners. PPL VIC considers the GAIC tax is grossly unfair, unequal and discriminatory impacting on small landowners and property owners on the rural fringes of Melbourne. We are implacably opposed to the extension of the Urban Growth Boundary and alienation of Green Wedges which will automatically be implemented if the Bill is passed.

Internal contradictions, political twists and turns

We found it most extraordinary that on Tuesday last Jenny Mikakos, MLC Member for Northern Metropolitan representing the Government, said “…the government does not support any move to delay consideration of this bill… It is important that Parliament deals with this bill before Christmas so that the government can give certainty to land-holders and industry. We believe there is no logical reason to delay consideration of this bill any further, and we will be opposing the procedural motion on that basis.” Yet late yesterday Wednesday Minister Madden approached the Opposition with a series of amendments and changes to the GAIC Bill. This was the fifth proposed change to Bill and gave the Opposition, let alone the community just 16 hours to scrutinise the amendments. This is an absolute joke and indicates to us that that planning in this State is conducted on the run.”

GAIC Bill deferred to 2 February 2010

The Bill has been “deferred” which means that it will not be considered until the next sitting of Parliament starting on 2 February 2010. As it will have been deferred for than two months it will be referred to the Disputes Committee. So its fate is uncertain. Meantime the Government blames the Opposition and Greens for holding up the Bill and for not giving the landowners “certainty.” The question is what sort of certainty Minister?

Rally at Parliament 2 February 2010

Make a date for 2 February 2010 - see you at the biggest rally ever on the steps of Parliament to continue our protest over the GAIC Bill! Best wishes for the festive season and a tax-free, green and carbon reduced 2010!

Source:
Protectors of Public Lands Victoria Inc.(PPL VIC)
MEDIA RELEASE
Thursday 10 December 2009

(Parts of cartoon based on one signed "V.D." which is all over the net, but no attributions available.)

Growth Area Infrastructure Contribution’ (GAIC)

From Beveridge in the north, Werribee and Melton in the west, to Cranbourne in the south-east, thousands of Victorians have recently been notified of the Victorian Labor Government’s intention to introduce what they are calling a ‘Growth Area Infrastructure Contribution’ (GAIC) for selected areas around Melbourne.

What kind of government just dreams up new taxes of $95,000?

In effect, this ‘contribution’ is a $95,000 per hectare tax on all vacant properties over one acre, and all properties over five acres with homes when you sell, regardless of the sale price.

Imagine the young couple who are struggling to pay the mortgage on a small property of six acres where they have built, or hope to build their dream home and raise a family. One of them loses their job due to the current economic climate and they decide they can no longer afford their dream. What chance would they have of raising enough from the sale of their land in a depressed market to cover what they owe the bank, plus over $230,000 for the Labor Government’s share?

Imagine the farmer who has put his blood, sweat and tears into life on the land and is coming to the end of his working life. His plans have always been, to sell his 100 acre farm. He’s struggled through years of drought to make ends meet and now, out of the blue, he has to pay the government over $3.8 million for the privilege of selling his property.

In the likely event that he doesn’t sell, Mr. Brumby and Mr. Madden will simply pass the $3.8 million debt (indexed annually) on to his children or widow when he dies. Whatever you do, Mr. Farmer, don’t get divorced and sell your property as part of the settlement, as they’ll take it from you then!

Who will stop this dictatorship?

When Victorians elected the Labor Government did we give them a mandate to simply take a large portion of our great Australian dream - a home which we have worked hard to get? We need to tell them, NOW, that we will not stand for a government that believes it has a right to introduce legislation such as this. The theft of privately owned property by force is something that we expect to hear of happening in communist or fascist countries, not in the lucky country, our country, Australia!

If you believe that it is unfair for Mr. Brumby’s duly elected State Labor Government to take a large portion of our homes in this manner please let them know that it will be political suicide for them to proceed with this legislation. Remember there’s an election next year! Today, email them, fax them or even just mail this page to them with a note voicing your disapproval at them stealing our homes by stealth.

Your home could be in the next lot that they steal, so tell them now, that it’s not acceptable!

John Brumby - Premier
Level 1, 1 Treasury Place, East Melbourne Vic., 3002.
Ph: 9651 5000 Fax: 9651 5054
[email protected]

Justin Madden - Minister for Planning
Level 17, 8 Nicholson Street, Melbourne Vic., 3000.
Ph: 9637 8087 Fax: 9637 8921
[email protected]

Source of article was Michael Hocking, Taxed Out Inc., PO Box 113 Beveridge, 3753. Backhouse & Thomas 3869TO

Apologist for growthism and global capitalism

Linsay Tanner has long been an apologist for growthism and nothing has changed recently. "We have always taken the position that whatever is required to sustain jobs, to sustain economic growth, will be done." (Source:Mark Metherell, "Budget deficit could reach $100b: Tanner," April 6, 2009)

He is an advocate for globalised capitalism. “Lindsay Tanner has chosen instead to be an advocate for globalised capitalism, to persuade us that There Is No Alternative, and that what is good for business is good for government, good for unions and good for everyone.” (Source)

In Lindsay Tanner, "Climate change balancing act", The (Business) Age, 2 September 2009, he writes that

“to […]challege that the Government's in the pocket of big polluters is just juvenile name-calling. It's an easy sledge from someone who doesn't have to get legislation through the Senate, manage the impact on the economy, and ensure community opinion remains onside.”

He therefore seems to admit that the government is in the pocket of big polluters, but rejects criticism about this as juvenile. He then rolls on to justify being in the pockets of big business with:

“Big polluters employ hundreds of thousands of Australians. Their activities are woven throughout our entire economic framework.”

Top down government keeps us on the treadmill

I wouldn't agree with the remark about 'ensuring community opinion remains onside', because how would the government or the community know what its opinion was? It doesn't get any chance to voice it. All we hear is the corporate media's opinion of what community opinion is, and it never asks us either.

The fact is that the government is so dependent on taxes from wage-earners that it cannot allow those wage-earners any freedom to reduce carbon emissions by, for instance, supplementing their incomes through relocalised production of essentials (home gardens) and to reduce of their own volition working hours and consumption in favour of a more sociable lifestyles (local democracy and production minimises travel and fuel consumption). If people simply slowed down production, this would take away from the government’s income and power as well as that of big business. (Slowing down production slows down carbon emissions and gives us more time with less emissions.) And the government’s overspending to continuously pump up economic growth relies on the constant import of more and more paying immigrants, in order to add to the numbers of tax-payers.

Rome did the same thing to avoid its own fall. Eventually it was selling citizenship and land just like Australia in order to get more tax-payers. This did not stop it from falling apart though.

The government’s policies are driving all costs up, along with the price of land, water and electricity, and its own debt.

Lindsay accuses the other side of ‘cheap rhetorical flourish’ about big polluters, but then he subjects us to his own cheap rhetoric about how “in the difficult real world of politics you don't always get everything you want.”

Well, in Australia, it seems like big business does.

ACF and Climate Institute government friendly

Tanner follows up with,

“Key sections of the environment movement, such as the Australian Conservation Foundation and the Climate Institute, have accepted that the Government's proposals are reasonable.”

Well, thank you for fingering the culprits, Lindsay. In fact most of us in the Environment ‘movement’ gave up on the Australian Conservation Foundation years ago, and came to terms with the fact that it takes peoples’ money and represents the government position, forming a kind of road-block to any true engagement between the government and the environmentally concerned and informed public. As for the Climate Institute, so far, it just sounds like some kind of advertisement for itself. It’s not too obvious what it does besides issue press releases and solicit funds.

Greens make Lindsay and his mates uncomfortable

Towards his conclusion, Lindsay knocks the Greens for disagreeing with Labor and failing to “build coalitions with others who have different views”. Lindsay says this helps prevent any action occurring. But if you know Labor, ‘action’ means more of the same: more population growth, more debt and more deals with the big polluters – property development and infrastructure expansion. Lindsay should know: the ALP owns two big property investment companies of its own – Labor Holdings Propriety Limited and Labor Resources Propriety Limited. Wholly owned by the Queensland Branch of the Australian Labor Party. Both were built up by Kenneth Rudd and Wayne Swann. In fact I can’t really tell the difference between the ALP, ALP governments and commercial property development companies. (Source: Expert discusses 'deliberately confusing' labor donations.)

Lindsay also says he believes that the only reason the Greens join other non-Labor representatives to vote down Labor’s policies on climate change is to take votes from Labor.

Short lesson in power of small parties and independents in parliament

In fact, another reason could just be that the Greens are only doing what they can to stop the ALP from expanding the problem of increasing pollution. Here is a good video about the Greens and the role that small parties play in politics:
http://www.youtube.com/watch?v=EGD0VncZOFI&feature=related