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First speaker in the mature debate

imageDear Mr Abbott,

I welcome your call for a mature debate on taxation. I too deplored the “screaming match” that surrounded the introduction of carbon pricing and am pleased you realise how counterproductive that sort of approach is to constructive governance.

As a concerned citizen I would like to make a few suggestions to get the ball rolling.

Your opening gambit is to increase the GST. This is a regressive tax which will, once again, disproportionately hit lower income earners.  Treasury modelling done for the previous government showed that even a modest increase in the rate to 12.5 per cent – along with removal of exempted items such as food, health, childcare, and school fees – could hit a two income two-child family by as much as $205 per fortnight.

Perhaps there is a better way.  For example:

Fossil fuel subsidies.

The Australian Government is set to spend over $40 billion in the form of tax rebates and concessions, foregone revenue and expedited write downs of assets per year from 2013/14 to 2016/17. This assessment only includes tax measures, and does not include direct grants or State Government measures, which could add billions more to the annual totals.

The proposed replacement climate policy, the Emissions Reduction Fund, relies on paying companies as an incentive to reduce their emissions. A fundamental contradiction exists between such a policy and the continuation of a range of existing fossil fuel subsidies. Many subsidies significantly reduce the economic signal for companies to identify efficiency opportunities.

Polluter handouts are also highly inequitable. For instance, the mining industry receives a 32c per litre discount on fuels such as petrol and diesel for off‐road use. So while most Australians are paying full price for their fuel at the bowser, their taxes also cover the cost of a huge discount to the mining industry. In all, this handout costs Australian taxpayers $2 billion each year.

Australia, along with all other G20 nations, committed in 2009 to phase out inefficient fossil fuel subsidies over the medium term. In his recent State of the Union address, US President Barack Obama reiterated the need to phase out tax‐based fossil fuel subsidies. Other organisations like the International Monetary Fund, the World Bank, the United Nations and the International Energy Agency are also calling for nations to end fossil fuel subsidies.

In 2009, the Commonwealth Treasury identified $8 billion in annual savings that could be made if Australia fulfilled this commitment. This money could be used to fund a wide range of nation‐building projects, yet to date we continue to use these funds to line the pockets of polluting, and in many cases highly profitable, industries.

Prime Minister Abbott has said that there is to be an end to corporate welfare. Statements by Treasurer Joe Hockey have warned that “the age of entitlement is over,” and that “everyone in Australia must do the heavy lifting now.” It is critical that this rhetoric, if applied, is applied consistently.

Superannuation tax concessions

A study by the Australia Institute found the rate of growth of super tax concessions is greater than that of the pension despite the ageing population, meaning the cost of the tax concession will soon overtake the pension to become ”the single largest area of government expenditure,” by 2016-17.

”’The age pension currently costs $39 billion and superannuation tax concessions will cost the budget around $35 billion in 2013-14,” the study found.

It notes that the Commonwealth bill for these concessions is projected to rise at a staggering 12 per cent annually to be $50.7 billion in 2016-17.

”The overwhelming majority of this assistance flows to high-income earners,” the report finds.

”Low-income earners receive virtually no benefit. The combined cost of these two policies will be $74 billion in 2014 alone.”

Negative gearing

The Grattan Institute’s report, Balancing budgets: tough choices we need, included a section on abolishing negative gearing, which it claims would save the Budget around $4 billion per year initially, falling to a saving of around $2 billion per year over the longer term.

Grattan highlights a number of non-budget (social) benefits from reforming negative gearing, namely:

1.increasing home ownership rates by reducing returns at the margin for landlords relative to first homebuyers; and

2.increasing investment in other more productive assets.

The report also debunks claims that reforming negative gearing would raise rents, since “for every landlord that sells, there would be a renter that buys and becomes a home-owner. The supply of rental properties would fall at the same rate as the number of renters”. It also does not believe that the construction of dwellings would be materially affected, since “almost all of investment property loans are now for existing dwellings”.

Tax avoidance

A report by the Tax Justice Network – an international group focused on investigating tax avoidance – and the United Voice union says almost a third of companies listed on the ASX 200 pay 10 per cent or less in corporate tax.

This is substantially less than the statutory 30 per cent corporate tax rate.

Some companies, such as James Hardie and Westfield Retail Trust, pay zero tax.

Rupert Murdoch’s 21st Century Fox pays 1 per cent tax and casino group Echo Entertainment pays 5 per cent tax.

The report says the government is losing out on at least $8.4 billion in tax each year, which is substantial but may be the tip of the iceberg.

According to the research, 57 per cent of all ASX 200 companies have subsidiaries in tax havens.

Several big-name companies, such as 21st Century Fox, Westfield, Toll Holdings and Telstra, have more than 40 entities in well-known tax havens such as the Cayman Islands, Luxembourg, the British Virgin Islands and Bermuda.

Fourteen in the 20 top companies, including two of the country’s big banks, also hold entities in these locations, according to the report.

“Secrecy jurisdictions play a key role in multinational tax dodging and undermine the ability of democratically elected governments to levy taxes in a just and fair way,” the report’s authors say. “Corporate tax avoidance must be addressed.”

Financial transaction tax

Introduce a Financial Transactions Tax on various categories of financial transactions including: stocks, bonds and currency. If implemented on a global basis, its projected revenue could be as much as US$400 billion a year, depending on the size of the levy imposed, the size of the reduction in trading (if any), and the number of implementing countries/jurisdictions. In the US alone it has been estimated that annually, between US$177 and $353 billion could be raised.

A flat rate of 0.05% has been proposed on all financial market transactions, many experts actually advise vary rates (of between 0.01 and 0.5%) depending on the transaction (stocks, bonds, currency, commodities, swaps, derivatives, etc). The UK stock exchange, one of the largest in the world, already has a 0.5% tax on share transactions.

(1) An FTT will reduce the instability in the global financial system by reducing the volume of trading in financial markets, especially the sort of trading that increases market instability and has led to the turbulence in the financial markets over the last decade.

(2) An FTT will provide an effective way of raising revenues for both domestic purposes, such as assisting governments help pay for the costs of post-financial crisis bailouts, as well as for spending for international public goods, such as the funds needed for climate change adaptation, and to assist countries in meeting the Millennium Development Goals.

The tax is specifically designed to target high frequency traders, especially of securities, where the average holding period is often minutes or seconds. High-frequency traders currently account for 70% of US equity market trading and 30-40% of the volume of trading on the London Stock Exchange.

The tax will only affect financial institutions and funds to the extent that they are involved in this type of high-frequency trading.

Australia is a leading player in global finance in its own right: the Australian Securities Exchange (ASX) is the ninth largest stock exchange in the world. Australian support of the FTT would be a significant boost to the cause of the global campaign. Moreover, Australia is a G20 country and plays a significant role in the group whose endorsement would effectively make the FTT a reality.

 

You could always keep the mining tax and close the rorting of FBT car leases and…dare I say, bring back the carbon tax…if you are mature enough to admit when you are wrong.

So let’s have some mature debate on these issues Mr Abbott before we jump to charging pensioners more for their bread and single parents more for childcare and sick people more for their medicine.

Over to you……

22 comments

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  1. M-R

    If Shorten rolls over on this one, I can only hope that there will be someone to stick a shiv in his back.

  2. Kaye Lee

    It’s really up to the premiers. We need to put pressure on them to have this talk with Tony because he is wedging them so they will have to agree to an increase in GST.

  3. Wayne Turner

    Abbott doesn’t know what “mature debate” is.Instead he uses “empty slogans”,bullying,abuse and LIES.He can NOT be taken seriously,he ignores FACTS and EXPERTS egs: These Libs on climate change,and the state of the economy under Labor.Plus has told so many LIES since (and plenty before) the election egs: “No excuses” NOW = NON-STOP cop out excuses that are LIES,by blaming Labor.No “new taxes” NOW = New taxes”,etc,etc…..

    Abbott sooked and LIED his way into office,just look at how he couldn’t and wouldn’t accept what happened at the 2010 federal election.

    Plus,Abbott does NOT know what mature and HONEST debating is:-

    http://www.youtube.com/watch?v=XBgfE3Qc7_g

  4. John Lord

    “The GST burdens the poor and those with the least capacity to pay. It discriminates against the poor and the pensioners who are living a hand-to-mouth existence and spending the bulk of their income on the necessities of life—food, clothing, rent, heating, power etc”

  5. Wayne Turner

    Spot on and correct John Lord.Hence why these Libs like the GST,and would love to increase it aka CLASS WARFARE LIBERAL PARTY STYLE!

  6. Loz

    These measure are is too intelligent, sensible and far sighted for this government.

  7. JustThink4Once

    I’m actually surprised that the coalition went the GST route. Given their performance to date I would have bet on a rooftop solar tax. Or can we expect that little gem once the last drop of disposable income has been extracted from the poor?

  8. aravis1

    Excellent, Kaye! I sent it to Tony, but I agree, the Premiers need to read it. Shall we all send them a copy too? More likely to be read and not just binned…

  9. Kaye Lee

    And if you don’t agree with our “mature debate” we will just do it anyway. (think school chaplains, permanent protection visas)

    “The price of petrol will rise in two weeks with the Federal Government deciding to push ahead with its plan to increase the fuel excise, without the need for legislation.

    The Government will give effect to its budget measure by increasing tariffs, in a move which will begin on November 10.”

    http://www.abc.net.au/news/2014-10-28/tax-on-petrol-to-increase-on-november-10/5846882

    Perhaps we need to define some terms here…….

    Debate: a formal discussion on a particular matter in a public meeting or legislative assembly, in which opposing arguments are put forward and which usually ends with a vote.

    Negotiation: discussion aimed at reaching an agreement.

    Consultation: meeting with experts in order to seek advice

    Collaboration: the action of working with someone to produce something

    Cooperation: the action or process of working together to the same end.

    Democracy: government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them; a state of society characterized by formal equality of rights and privileges.

    Fascism: an authoritarian and nationalistic right-wing system of government and social organization.

    Omniscient: Having total knowledge; knowing everything

    Narcissism: extreme selfishness, with a grandiose view of one’s own talents and a craving for admiration, as characterizing a personality type.

  10. Gilly

    Mature debate used to be part of the schools curriculum, I suspect that now the only forum for mature debate is in the pre school playground.

  11. Kaye Lee

    The treasurer comes back with a mature debate scenario:

    He wants to increase interest rates, not that he has the power to do so. He wants to increase the GST, not that he has the power to do so.

    “The biggest challenge for states is the massive growth in the cost of running their hospitals. They have to find the money for that. We say we are prepared to help them,” he told AM.

    Ummmm…you just cut $80 billion from their funding. With help like yours we won’t have any public schools and hospitals to pay for….or is that the general idea?

    “how are we going to get growth going in the world economy over the next few years?…the only way to do it is through structural changes that make us better at what we do.”

    Ever hear of research sunshine? Ever hear of investing in education? Do you understand the benefits of a healthy workforce? How about job creation?….or is 457 visas, the abolition of penalty rates and a reduction in the minimum wage, making people work till they are 70 and discouraging people from seeing a doctor the plan?

    Raise revenue rather than cutting spending. Seriously, it isn’t that hard.

    http://www.abc.net.au/news/2014-10-28/hockey-backs-murdoch-claims-that-low-rates-make-the-rich-richer/5846688

  12. June M Bullivant OAM

    Well done Kaye, but of cause it will not happen, that is hitting the well to do and that does not happen.

  13. Florence nee Fedup

    Mr Abbott assumes the states will be in agreement with him,. Trouble for PM Abbott, the premiers all know that what he is proposing is far from beneficial for state governments. They are sovereign governments in their own right, according to the Constitution,

    M Hockey, putting in place the full agenda of the IPA does not address the structural problems in the budget. In fact, makes things worse. leading to a more inequitable and unfair society.

    Mr Hockey, Labor does indeed agree adjustments have to be made., In fact all governments over time should continually reassess and realign the economy., That is good governance and role of government,.

    Mr Abbott, you stood there yesterday,begging for partisanship and mature debate on economy, sate relations and I hope looking at revenues for the future.

    Mr Abbott you must have heard the screams coming from the public, over he last few years for this to occur.

    Mr Abbott, you are PM., M Abbott it is your responsibility as leader of the country to ensure that comes about.

    Sneaking things through the back door and continuing with your secret non transparent government is not the way to do it.

    Mr Abbott, you have to drop stunts and slogans. We have to know what you are doing and intend to do in our name.

    You have to trust all, you want to conduct mature debate with.

  14. Peter Anson

    A tenet of the Right is that the poverty is a choice and if you make that choice, then it’s their job to punish you. It stems from a belief in discredited ancient texts and supernatural beings.

  15. Anniebee

    Florence nee Fed Up …..

    ………” Mr Abbott assumes the states will be in agreement with him, ” ..

    IF … he seriously believes that, he’s got one helluva shock coming to him. The States ( from all times I can recall -and that’s a lot ) have always had to fight for a fair go ( no matter who the party in Government is ) ……. to stand up for their rights, and to fight whichever incumbent Federal Government is in place at the time ………. over many many issues – mostly monetary.

    While I ( and so many others would ) agree with your sentiments here, they would fall on deaf ears. The deaf ears of oligarchs, dictators, fascists — – – – they don’t have ears, and they don’t have hearts. … They in fact have nothing that is humanitarian – in any way.

    Sorry Florence ….. don’t wish to offend or pour cold water …… it’s just a fact of the circumstances we find ourselves in today – but not for long would be my hope ( and everyone elses’ hopes – including many Liberals who seem to be in a state of shock at this time ).

    ______________________

    Kaye Lee ……..

    Your definitions ( October 28, 2014 at 11:44 am ) are … …. .. interesting ?

    Not sure why you chose to make the definitions in the first place. But here goes in response.

    ….Democracy – doesn’t exist at this time in our country.

    ….Fascism ……. is in fact what we have.

    ….Omniescent ….. something the Abbott thinks he has total and exclusive claim to.

    …. Debate – there seems to be no such thing anymore in Parliament.

    ….Negotiation | Consultation | Collaberation | Co-operation. ………. those words do not exist in Parliament or with its leader.
    .
    …. In fact I doubt the Abbott would begin to know the meaning of those words.
    ….And if he does, it suits him to ignore them, for his own warped pleasure and advancement.

    ….Narcissism. …. Now THERE’S an interesting study if ever there was one. !! Not sure why you threw that one in !

    ==========

  16. Florence nee Fedup

    Annie, you have not offended me in any way. I agree with you. Saying that, I believe we have to go back to basics. We have to change public perceptions of many, that we cannot do anything.

    For once Abbott is correct, Mature debate is needed, to discuss the roles and responsibilities of states and federal government. He is wrong when he says it is all about the economy, team Australia It is about our democracy, our constitution and the society we want to live in.

    it is not about being on side with Abbott. Pulling together as a team is a con. The reform we need, is for the voter to take back control of the government.

  17. stephentardrew

    A mature debate with the immature.

    Yeah right sounds good to me however what are those nagging doubts in the back of my mind.

    Sounds like the Kafoofla bird to me: you know ever diminishing circles till it disappears up its fundamental orifice screaming out Kafoofla, Kfoofla.

    I think thats going to go well don’t you?

  18. Florence nee Fedup

    Is impossible to have a mature debate with one, that has not grown since adolescent. The Tony we see, is the still one, that spent his time in the union rooms at Sydney University, still not sure where his heart laid. Sadly the mob he sided with disappeared into the ether. That was the DLP. He then went onto the UK, spent his time, enmeshing himself in a love affair with Thatcher, At the same time, enjoyed himself travelling in Abbott, on the side of Apartheid.

    We still have the same man today.

    Saying that. I do hope that a strong mature debate continue on the topic he has raised. Really has little to do with a GST. That is just another regressive tax.

    What we are really talking about, is how far our system of government has moved from the what the founding fathers hope for a century or more ago.

    The Federal government has been encroaching, forcing itself into the role of states. The nation is suffering from this. Work that out out, then look at ways of funding the system.

  19. Rob031

    “Mature Debate” like “Civil War” is an oxymoron. You can have a friendly and even a civil debate; but, as debates are really games played by people hell-bent on entertaining or winning (eg. Oxford debates) they are rarely mature. I wish Abbott and his crew would grow up and view things as more than just about winning.

    Such adolescent self-indulgence at the expense of us all. Bah.

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