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Two beatups

August 30th, 2004

Tonight’s election news had both parties engaging in dreadful beatups. The Libs tried to turn a Labor policy of a 0.1 per cent addition to the Superannuation Guarantee Levy into “a new national payroll tax’. This is so bogus I can’t imagine it lasting past tomorrow.

Meanwhile Labor plugged away on the line that Costello will replace Howard sometime in the next term of office, and that Howard is being dishonest by not admitting this. Of course, this will probably happen, but it might not. Having predicted before the 2001 election that Howard would not serve a full term, I’m not going to make any predictions or demand any promises on this one. If you vote Liberal, you might get Howard, you might get Costello, you might get someone else. I suppose it’s unlikely that Labor would dump Latham in his first term if he won, but give him a couple of terms in office and the same question will arise.

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  1. thersites
    August 30th, 2004 at 20:27 | #1

    If there is a levy (however small) which doesnt flow to productive investment how is this not similar if not equivalent to a payroll tax ?

  2. Adam
    August 30th, 2004 at 21:29 | #2

    The economic effect is equivalent, but by that definition you could describe the superannuation guarantee charge itself as a “payroll tax”. Think of the Labor proposal as an insurance component against theft of workers’ funds.

    I thought the Liberals could find something better than this. What could be a worse topic to pick than a Labor plan to protect workers entitlements from corrupt bosses? Labor owns issues like that.

  3. Mark Bahnisch
    August 30th, 2004 at 21:48 | #3

    Adam, particularly as one of the more spectacular instances of a company defaulting on workers’ entitlements in recent years was one chaired by Stan Howard – the older brother of a certain John Howard MP.

  4. thersites
    August 30th, 2004 at 22:02 | #4

    “The economic effect is equivalent” ?

    Isn’t there a ‘deadweight’ component in this which isn’t in the SGL? To say noting of the moral hazard involved with charging the majority of reputable companies indiscriminately to pay for the potential theft by a few ?

  5. Jill Rush
    August 30th, 2004 at 22:07 | #5

    I was bemused in the last election by the threat of Peter Costello – which many would not see as a backward step. How much more scary is the thought that the same politician who told us that politicians can’t be trusted and helped set up The Australians for Honest Politics Trust could become the leader.

    The PM is obviously hoping that by stating that he can be trusted he will convince enough in the marginals to support him.

    I wonder how many safe seats will become marginal as those who are naturally Liberal because they have strong values will turn against the PM because of the kinds of actions that the PM has engaged in during his term.

    It does threaten to be a long 6 weeks.

  6. John Quiggin
    August 30th, 2004 at 22:27 | #6

    Thersites, on the same basis you could say that the Howard government has raised the GST half a dozen times (once for each of the special levies on goods and services it has introduced), and introduced two new income taxes (the gun levy and the Medicare surcharge). Face it, this is a beatup.

  7. August 30th, 2004 at 22:39 | #7

    The Howard Government certainly introduced a GST on textbooks that didn’t exist last year.

  8. thersites
    August 30th, 2004 at 22:47 | #8

    John, you seem to have avoided the query about whether or not its a tax for the purpose of partisan point scoring which wasn’t what i was about!?

    So much for the prospect that academic leftish sites differ in any substantial way from the so called RWDB blogs : /

  9. John Quiggin
    August 30th, 2004 at 22:55 | #9

    Thersites, I repeat what I said in the post. This is a small change in the rate of an existing tax. It’s silly to call it a “new payroll tax”, just as it would be silly to call the Medicare surcharge a “new income tax”.

  10. Mark Bahnisch
    August 31st, 2004 at 00:24 | #10

    Jill, Peter Costello looked particularly smirk-ish when “ruling out” a challenge at his joint press conference today, I thought. The more he’s out there in the campaign, the better, I think.

  11. August 31st, 2004 at 03:36 | #11

    A report in today’s Age says it’s definitely a tax. You might want to fire off a letter, John.

  12. Don Wigan
    August 31st, 2004 at 07:30 | #12

    Could be, Robert. But tax or levy it could be the briar patch if the Libs want to go on with it.

    The purpose will have to be explained. Most employees would be in favour of a system that protects them from being dudded by defaulting employers. So far the govt has done little on this matter other than cover the PM’s brother’s company.

  13. John Quiggin
    August 31st, 2004 at 07:48 | #13

    Rob, of course it’s true that a levy is a tax, and the Age found plenty of people to say so. But “new” is strictly false and, in any case, the description as a whole is completely misleading.

    I still can’t see this one running past today or (as several commenters have noted) helping the Liberals if it does.

  14. Mike Hunt
    August 31st, 2004 at 11:13 | #14

    Mark Latham claims a levy isn’t a tax if it is directed towards a specific purpose. Whereas a tax goes into consolidated revenue.

    The constitution has a different view -

    81. All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.

  15. Adam
    August 31st, 2004 at 11:21 | #15

    thersites: “To say nothing of the moral hazard involved with charging the majority of reputable companies indiscriminately to pay for the potential theft by a few ?”

    This moral hazard is much better than the status quo (where the long-suffering Australian taxpayer pays out the debt to employees that should have been paid by the company, thus enriching the shareholders/officers at the expense of the taxpayer. Or in the case of Ansett where the travelling public was fleeced with a ticket tax for the corruption of Ansett executives). The business lobby doesn’t seem to care about going after corrupt bosses, this is a worthy stopgap measure.

  16. August 31st, 2004 at 11:49 | #16

    thersites: “moral hazard”? – an argument that can be made against most payments to government. Why pick on the tiny target of 0.1%, when you could easily pick on a 10%, 30% or 47% tax?

  17. August 31st, 2004 at 13:53 | #17

    “of course it’s true that a levy is a tax”

    John, that’s true in the technical sense, but then so is the compulsory superannuation contribution. In the day-to-day colloquial sense (ie, the one that counts outside the acadamy) it is not a tax.

    Most people consider the super contribution as part of their remuneration package. This insurance levy is no different — it is paid to an independent body for the benefit of the worker.

    You’re probably right that this will not last long, but much like the children-overboard lie it’s about building up a background picture. When people turn up to vote, they’ll have “new tax” against Labor deep in the recesses of their mind. That’s why it needs to be challenged — because Labor wants to associate “misleading” with the Coalition, and every little lie or exaggeration must be exposed.

  18. September 1st, 2004 at 09:05 | #18

    Robert, I never considered super as “mine”, always supposing that the funds had been made too inaccessible to me and subjected to the whims of others. You know, the Woody Allen line about a financial adviser being someone who looks after your money for you until it’s all gone. I suspect my attitude is quite prevalent – particularly since the current system is built around locked in assumptions of continuity of employment, optimistic economic growth, no demographi issues affecting prices of goods and services after we reach retiring age, etc. Practically nobody will ever get back what they paid in, let alone any gain.

    So, how many people really believe they are getting anything rather than being resigned to numb acceptance?

  19. John Quiggin
    September 1st, 2004 at 12:41 | #19

    As predicted, this was a one-day wonder. Obviously, it was a prepared ambush from the Liberals which managed to get them a good headline. Best, I think to let it die.

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