The taxes dropped are a mixture of measures, but on the whole the Treasurer has pandered to vested interest. It is perhaps no coincidence that today CEDA (Committee for Economics Development of Australia) issued a report calling for a reform of the tax system, measures to improve productivity and an end to subsidies that maintain poorly performing industries that can't compete without state help.
Hockey has stated he will repeal the Mining Resources Rent Tax, largely to placate the powerful mining lobby. Taxes on Economic Rent are one of the few taxes that have no impact on output and are seen as unambiguously good and fair. He has also decided not to introduce changes to Fringe Benefit Tax which helps the car industry by legalising tax evasion.
There are two key issues to consider:
1. Is there really a budget emergency?
2. Is there any political will to simplify and improve Australia's tax system?
1. The obvious answer is no. Australia has a very small deficit on its budget and very low National Debt. The current deficit could be sustained indefinitely without any trouble whatsoever.
2. This too is a no. The Henry Commission suggested sensible reforms to the tax system which were basically ignored. The problem is that Australian politicians are weak and more concerned with keeping power than dealing with real problems. Every tax concession, however unjustifiable, loses somebody's vote and rarely gains as many.
It is not possible to do justice to the issued raised in a single post. However there are many questions to take up over the coming year before the next VCE exam.
Australia's Debt is low by international standards. Source: ABC
No comments:
Post a Comment