Labor’s long-awaited tax policy has been released, and a quick look suggests there’s not much to get excited about. Labor has taken on both stages of Howard’s budget tax cuts and added a bit more for nearly everyone, but not a lot for anyone.
The most interesting thing in the package is the reform to family tax benefit. I’m not an expert on the complexities, but Labor appears to have achieved a useful simplification and expansion without spending a heap of money.
The other point that may arouse some interest is that the funding calculations include offsets from assumed behavioral response – more spouses going back to work. As the package points out, the precedent for this kind of thing was set by ANTS. Still this will heighten the intensity of the dispute over whether the package should be submitted for costing by Finance under the (ludicrously misnamed) Charter of Budget Honesty. My advice would be to refuse.
Apart from this funding, relies on two more changes to superannuation to add to all the others we have experienced. First, temporary entrants to Australia will no longer get the benefit of the Superannuation Guarantee Charge – this will go to the government instead. Since other countries do the same and those affected are, by definition, not voters, this looks like a sharp political move. The other is to abolish the superannuation co-contribution recently introduced by Howard.
It’s disappointing to see no assault on avoidance through trusts and private companies, nothing on capital gains or fringe benefits, and nothing much on compliance. However, given that the approach seems to be to produce each policy item with an associated set of funding proposals, perhaps there is still something to come.
With luck, this will neutralise tax as an election issue, but Labor needs to come up with something more impressive than it has produced so far in its core policy areas of health and education.