Ho hum

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.

15 thoughts on “Ho hum

  1. “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.”

    John, you can’t be (politically) serious. No opposition would ever promise anything on this front four weeks before an election. They would get scaremongered to death. (If you don’t believe me, ask Bill Hayden about the 1980 campaign.)

    All that stuff can be done from the safety of government. There’s no law that says that just because you didn’t mention it in opposition, you can’t do it in government. As a matter of fact, you can do it in government even if you swear on your grandmother’s grave, while in opposition, that you won’t do it in government. (If you don’t believe me, ask John Howard about the GST.)

  2. Dave, Howard fought an election on the GST. That’s a mandate.

    Will the delay in reducing tariffs on cars and clothing cost consumers much?

  3. Bit bitter there Rob? sorry I’ve got to agree with Tom on this one.
    Labor’s tax pack is just tinkering around the edges, and i hate to say that the Liberal scum will make milage out of it.

  4. JQ wrote: “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.”

    Are the ALP going to reclaim domestic employer super contributions to temporary entrants as well? Employers are, by definition, voters, so the move may not be so sharp after all.

  5. So Mark, you believe a particular politician should run on the same platform throughout his life, and Robert, you’d like to change the electoral system to PR in the lower house?

  6. Just read the ALP policy. It states (on the top of page 4) that employer contributions to temporary entrants “will be paid directly to the Commonwealth”.

    So they will basically increase taxes for all businesses that hire foreign workers.

  7. Tom Davies, which economist claims that reducing tariffs in those industries will not lead to chronic job losses? Consumers can wait, if Latham got one thing right in his muddled chat with Kerry Obrien last night it was that unemployment is a plenary issue.

    Unfortunately he completely lost me with the rest of the detail, and while I’m no Einstein I suspect this means he’ll have trouble selling it generally. What I heard between the waffle was “savings….better off… excluded family payment…reincluded means many aren’t better off…especially the poorest…”

    Sadly I must also admit Costello was on fire in his response, a rare sight!

  8. No George, it is not a new tax on employers. Employers already had to pay that money in super (which is effectively a tax).

    And just because Rob pointed out that Howard lost the popular vote does not imply that he supports PR in the lower house. What sort of idiot would draw such a conclusion?

    Personally, I like the package. What the capitalists should note is that the $10 bn tax cut is funded half through spending cuts.

    Recent days have confirmed two things in my mind. Latham is the better candidate for anybody who is capitalist and Howard is winning the campaign. Pitty.

  9. Regarding PR and the popular vote, I’m just suggesting that if you imply “he didn’t have a mandate because he didn’t get the popular vote”, which was my interpreatation of Robert’s remark, then perhaps you want a different electoral system, one which makes the winning of the popular vote explicit as a requirement for governing.

  10. Regarding the ‘hard sell’ that Latham has to do, it all depends on how successful the Coalition will be to confuse people.

    However I have been pleasently surprised at the tabloids reaction to the policy:

    The Daily Telegraph headline is “$92 per week” which is much better than some of the angles they could have gone with.

    The same with The Herald-Sun whith the headline: “Family Cash Lure” with a neat table dividing “winners” and “losers” and what the ALP wanted to show as winners were all there. While the losers were ‘travelling smokers’ no much sympathy there.

    The Courier Mail was even better with the headline:”Billions for Battlers”.

    But the best headline goes to The Adveriser with the headline: “Family Man: $92 tax cuts – Latham pitches to those Costello forgot”.

    This is what the ALP needs to do. The package must be complex but it needs to reduce its message to a ‘relaxed and comfortable level’ as suggested in an opinion piece by Peter Martin in the Sydney Morning Herald.

  11. Shelving tariff reform in TCK and Motor sectors is nothing but a sop to the militant AMWU, and will cost punters plenty and ensure the continued inefficiency of these sectors, with featherbedding of inferior products and shoddy work practices. As to carving up trusts and companies, who do you think already contributes the greatest amout of tax revenue? Ther few hedges left merely serve to ensure the few remaining decent earners stay here rather than flee to a less userous clime. Surely no-one can claim that commonwealth and state governments don’t have enough revenue? The amount of waste and largesse sprayed around now makes me feel ill; what would the extra funds swiped from trusts and companies be spent on- more AC grants? Bursaries to UQ economists, perhaps?

  12. Invokes the jokes
    How long do you think Peter Costello has been sitting on this one, just waiting for Mark Latham to release Labor’s tax package?: Treasurer Peter Costello branded the Labor package “Hoax the folks”. Good heavens. At least the SMH saw…

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