Malcolm and Scott’s great big new tax on everything
According to the Liberal Party newsletter, aka the Telegraph, the party who never raises taxes, the party who screamed blue murder about the carbon and mining taxes, the party who supposedly saved us $550 a year by ‘axing the tax’, is set to cost us thousands by raising the GST to 15%.
Today’s article seems to be a fishing expedition to see how much they can get away with. The preferred option is an increase to 15% with fresh food remaining exempt. The National Centre for Social and Economic Modelling estimates the average household would face extra costs of $2915 a year under a 15% GST.
So much for Greg Hunt’s hand wringing over the price of electricity – it’s about to go up by 5% along with everything else but it won’t be the polluters picking up the tab.
To hide the pain, Scott Morrison is talking about income tax cuts.
“When you have the average wage earner in this country about to move into the second-highest tax bracket at $80,000 next year, you’ve got a problem with the incentives in your tax system,” he said.
One wonders why Scott hasn’t considered changing the threshold or would that be too easy.
Thankfully the miners and big banks will continue on their merry way with their superprofits intact while pensioners and single parents pick up the slack on budget repair.
Looks like the joke’s on us.
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Return to home pageWe have to look at the big picture. If we don’t start paying our way, the pain for us all as we wallow in increasing debt will be so much greater. Increasing the GST means the more you spend, the more GST you pay. This hopefully means the very rich will have to fork out their share for once.
Taxing the poor again, but make sure you hit the big end of town Malcolm.
Kutica, simple maths tells us that a person on $20,000 a year pays considerably more GST as a percentage of their income, than someone on $100,000. That’s what makes an increase in the GST unfair.
A lot of small businesses were rubbing their hands in glee when the GST came, they creamed an extra 10% of black money, now they will get 15%.
You’ve gotta love the Murdoch press. The headline is
“PM trades tax cut to raise GST to 15 per cent.”
A somewhat different reaction to when Labor suggests any new tax….then again, Mitch Fifield is currently trying to change media ownership laws for Rupert so we should expect even more back scratching than usual.
Kutica: When you say “If we don’t start paying our way, the pain for us all as we wallow in increasing debt will be so much greater,” do you mean everyone including big business, or are you merely referring to the working poor?If it is true that Ikea paid tax on 1% of turnover “represented as ‘profit’,then you have to ask ‘why are they still in business?’ Wake up Kutica, and see that the GST increase will NOT solve your perceived ‘problem’. Honest dealing by big business would be a great place to start.
And therein lies the problem. I don’t mind paying more tax but I very much resent doing so when the rich don’t pay any. All incentives are geared towards the wealthy. They want to cut services to us and have us pay more for everything but are bending over backwards to protect the rich – they won’t even name and shame but you can bet your bottom dollar that if someone scams a few hundred on welfare it will be on A Current Affair with names and accompanying film footage.
I haven’t been keeping up with Liberal Party messages in the Telegraph but I imagine they have noted that the need to curb generous superannuation contribution concessions, Family Trust rorts, Capital Gains Tax concessions and excessive Negative Gearing giveaways are far more pressing reforms than increasing the GST which, after all, we are told, is a states tax.
Just on GST, I was picking up some landscaping materials recently and offered my credit card and the guy said, ‘ if you put it on a credit card I’ll have to charge GST ‘ – so I paid cash and in theory got a 10% discount. So, if the GST goes to 15% and I pay cash am I on a winner ?
Off topic but worth listening to. Warning, very long. Shorten answers questions from the floor on all topics Appears going to be regular happening until the next election.
Full answers given.
http://www.billshortencommunitybbq.com.au/stream
Terry2. Over the last few years when it comes to tradesmen, every quote comes with message pay cask, get 10% off Even had one plumber take me to the nearest club to get cash. No one seems to care. The black money market is greater than ever. Something GST was supposed to eliminate. Is nice to get something cheaper, but this behaviour means we actually pay more tax .
Malcolm Turnbull was always going to do this. Like unleashing Nuclear energy on us.No changes to Capital gains or changing Negative gearing. Raising the GST will have a devastating effect on the poor. There are so many other levers to pull. This is the easiest one by far.
Surely even the timid, vapid ALP can mount a solid attack on this injustice… right? Right?
“vacillating”
That’s the other word I was looking for…
Even if Turnbull gets his way (or meekly goes along with this..I’m yet to decide which it is), there is a problem. If you reduce the spending power of the poor and lower middle classes then what’s the point in hiring extra staff to work weekends (minus penalty rates) because you have reduced the spending power of those whose incomes contribute most to where most jobs are..retail and services.
Increase the GST while wage growth is flat while simultaneously cutting penalty rates? I hope that everyone is preparing themselves for the next Recession.
They never seem to get to the consequences part Carol. Conservatives hate progressive taxation – in fact they hate paying any sort of tax. They would much rather give the money to their accountants. GST will be a doddle for Coalition donors who will no doubt also want company tax reduced. Just keep your hands off their in-house loans to themselves and all will be sweet.
Turnbull seems to be showing the far right he can accomplish their goals. While it makes sense from his point of view it is a mindboggling con.
welfare cuts, university changes and cuts. Australia can not afford an addition to the GST solely aimed at tax cuts for higher income earners.
Before Hockey got the boot he was arguing none of the extra GST should not go to education and health.
So there is no reason for us to want a GST increase at all.
The states have been pressured heavily into accepting the GST increase enough that state budgets changed dramatically to reflect the extra money they need to raise, services cut.
What happened to corporate tax evasion, that was left without any air as quickly as they could manage it. we would be receiving regular media conferences if it was a trumpet worthy cause.
The GST is the tax that keeps on taxing even the very poor pay it on secondhand clothing, while Business’s and those who benefit from things like business owned vehicles, homes and expense accounts pay nothing. Even farmers use un-taxed benefits AVOIDING the GST This is just a federal grab at GST tax in exchange for what?.. Not indexing income tax and funding hospitals and education from the GST and not from general revenue…. in effect transferring costs on to people and off of Business and general revenue…
Instead of raising the GST, why don’t we follow Canada’s lead and cancel Tony’s jets. There’s $25 billion. And if we really want to be sensible, how about we cancel the submarines which were going to cost $250 billion over the next 30 to 40 years. Let’s build drone/robot technology.
Reinstate the carbon and mining taxes and close our offshore detention centres.
Cut company tax if you must. Adjust the income tax brackets appropriately and index them to avoid bracket creep. Increase pensions and Newstart by $50 a week to stimulate the economy.
Stop bombing the Middle East and increase foreign aid.
Well that was easy….
Oh and let’s not forget, we have well over $100 billion sitting in the future fund which shows no sign of moving towards ethical investment. If our infrastructure is such a good investment for the private sector, why don’t we put our future fund to good use instead of grabbing a quick buck from slave labour and unsustainable polluting industries and investing in offshore tax havens.
Another kick in the guts for pensioners and low income families and singles…way to go Mal the top ends pal, fulfilling another task as your part of the pay back for the PM job. Different musician, same tune.
Didn’t Scott Morrison reiterate recently that we don’t have a revenue problem?
My answer to TAX REFORM
Tax threshgold say $20,000. Slidiing scale 5c in the dollar up to $50,000. Say 71/2 c in the dollar to $75,000. 10C in the dollar to $100,000 and maybe 121/2 over and above on personal income. Use a similar scale for small business and big corporations but on turnover rather than profit. No tax perks. No deductions. Reduce our pollllies salaries to something more in line with the rest of the world and their pensions to 1/2 what they were earning when on the job.
Anybody want to vote for me yet?
So, increasing the GST will also require a nationwide plebiscite?
I would have thought its impact would have been far more wide-ranging that something like sex marriage, which apparently can’t be passed without a full public vote.
Hockey and Morrison have both said, at various times, that increasing the GST is not the priority as it would require an increase in pensions and other welfare including New Start and a reduction in income tax for those on the lowest wages. This was Joe last December:
“ If you increase the GST, you need to compensate middle – and low-income Australians with significant tax cuts,’’ he said. “We haven’t got the financial capacity to do that at the moment. Also, I don’t think it is the right time at all to increase prices for Australians. I think they have got enough pressure on family budgets as it stands.Therefore, we should not be increasing the GST.”
So, apart from a new leader and Treasurer we now appear to have the capacity to grant that compensation. Does the Tele. ever ask any question when they get these ‘drops’ ?
You can’t tax on turnover rather than profit. I own a business whose turnover is over a million each year. So are the bills.
That is a very big reduction in income tax. At the moment it is 19c for every dollar between 18,200 and 37,000 then 32.5 cents up to 80,000 then 37c up to 180,000 then 45c over that (plus 2% medicare levy and a further temporary 2% for the top bracket).
I think the brackets need adjusting and the tax free threshold should go up but the rates aren’t that high comparatively.
Relative to GDP, Australia has the third lowest level of total taxation on personal income, which includes taxes on personal income, social security taxes and taxes on payroll, in the OECD. Australia’s tax burden relating to these items (11.2 per cent of GDP) is lower than the OECD average (18.4 per cent).
For those who are willing to exchange high income tax for excellent public services, Sweden (57 per cent) and Denmark (55.56 per cent) are much more appealing destinations than Australia.
While Australia doesn’t tax at the top rate until your annual income hits $180,000, these two Scandinavian nations start a lot lower – Denmark at $86,000 a year, and Sweden at $93,000.
Austria, Belgium, Finland, Israel, Japan, the Netherlands, Slovenia and Spain all have top marginal rates above 50 per cent. Interestingly, this group of countries plus Australia boast eight of the world’s 10 most liveable cities, as judged by Monocle.
This suggests that, as a rule, a high level of income tax corresponds to a high level of liveability.
Turnbull puts up GST to 15%. Now watch Woolworth’s really go broke as shoppers exodus to Aldi cheaper prices to make up for hit of GST hike.
Meanwhile Labor waffles along in I can’t look different from this guy because he is popular. Well Bill do us a favour and piss off. If you cannot scream about the GST while rolling out the sixteen year old farce then no wonder your approval rating is in the dumps. Labor has become a helpless characterisation of ineptitude and fear. It smells like fear and looks like fear to me. Stand up and fight for the people because that is your job. Over two years of this garbage is beyond a joke.
@stephentardrew…. awww… No no no no. You’re so wrong. It’s all part of Labor’s magnificent strategy. Small target. Doesn’t spook the punters. Don’t be controversial. They’re playing the ‘long game’ brilliantly. They are going to fire up real soon… etc etc blah hoot spin blargle blargle mutter plop…
Goodbye middle-class when you raise the GST. causing stagflation by any means. Watch as the economy really plummet off a consumer cliff and grind to a halt when they raise the GST, Its already very fragile and the demographics of Baby Boomers no longer spending as their over prime consumption age hump and Gen. X,Y are less cashed up in their forties than Baby Boomers parents were in their forties means it limits consumer choice meaning higher and middle end priced products stay on the shelf. Not good policy considering stock inventories globally are not moving stuck on the shelves and shipping and truck comtainers are down to 60%. Obviously Morrison and Turnbull don’t read Zero Hedge or economic demographer and trends forecaster Harry Dent.
You have no sense proportion kutica when the really well of have something to eat or drink or buy a car or get repairs done it may come an extra 5000 dollars a year, a mere 12 dollars a week, but when the poor and median income earners get a boost in the gst 5000 dollars is a lot of money. When you take an extra 2000 dollars of a 200,000 dollar income it will barely cause flutter, but when take 2000 dollars of people earning 20,000 or 40,000 dollars a year it really hurts. It means you can’t buy that extra bit of petrol to go away for a week end it means you can’t can’t buy that extra services for maintenance on your home or car, it means you can’t go to doctor or dentist because you can’t afford it, and that is what a 15 percent gst will do to people on lower incomes, that’s why it’s not practical, it may look good on the bottom for turn bull and company but it’s certainly not good for people on lower incomes and don’t forget turn bull is a multi millionaire, that means a gst will have very very little affect on his income which safely locked up in the cayman’s a nice safe tax haven for him.
Weren’t the jets honest John’s idea? We could have bought the French jets (which are working) for a fraction of the price and they’d have been here by now.
A British fighter-industry executive said “The problem is the aircraft is tens of millions of dollars more than they originally told people it would be, and that’s just the acquisition price. It’s the sustainment cost that will destroy air forces.”
Each plane now costs an estimated $US108 million, according to Lockheed, and Canada cancelling its order is estimated to add another million to each plane….if they ever actually overcome the problems and build the bloody things.
@Kaye Lee… It should be noted that Canada is not the first country to cancel orders of the F35…
http://www.newsweek.com/more-bads-news-f-35-plane-ate-pentagon-378110
A 50% increase in the GST would be a very “impressive” move while the country teetering on the edge of a recession.
We are continually told that some of the very wealthy, and some companies, pay NO TAX at all. Why isn’t it possible to make them do so ? Why is it ALWAYS those who already pay the proper share ie PAYG workers, who have to put their hands in their pockets once again ?
How hard can it be to fix the system that allows the super rich to get away with daylight robbery ?
I’d be happy to pay more too – with the extra going to public services : health, education, transport. But I am NOT happy that my weekly pence will be diminished even more when I KNOW that someone with megabucks can hide it so they pay nothing. And it is bs to say that GST is totally fair across the board. NO, it isn’t.
Someone, anyone, fix the system.
Or as Humphrey Appleby might say: “That would be very courageous…“
Can we stop referring to the hike in GST as a 5% increase? When I left school, an increase from 10 to 15 was a 50% increase. Let’s call it out for what it is. If you increased income tax, or any other tax, by 50%, people would scream blue murder.
Kutica at 6:05 am:
‘Understandings’ like that ensure the GST will be increased by 50% without much loss of political capital.
The claim has everything of political import. It cites ‘the big picture’, ‘paying our way’ and ‘wallowing in increasing debt’. And it’s wrong at so many levels. To correct, would only reinforce.
The education system fails to develop an ‘inbuilt, shockproof, crap detector’?
Keitha Granville, here’s an article you should read to see ‘how it’s done’.
And it’s all ‘legal’. Now who is it that makes the laws?
More here: https://theconversation.com/apple-itax-made-in-ireland-designed-in-the-us-24061
Id like to no what type of jobs these people are doin for the average aussie be on 80k a yeah what a load of shit heres a thought how bout u tax all the free loaders recieving centrelink payments or all of our new found love for giving the easy way for all these freeloading refugees or muslims that the average 40 -50k a year aussie is supporting not to mention all the crack heads on centrelink with no aim at all to get a job this is just bullshiy an i thought abbott was a wanka!!
Another ploy that Murdoch and Adani both use is for one arm of the company to make a loan to another arm of the company at exorbitant interest rates. Nothing actually changes except the balance sheet to shift profit and to make money on exchange rates. That’s why we had to pay Rupert $882 million.
http://www.afr.com/business/media-and-marketing/publishing/news-corps-882m-blew-the-budget-20140216-ixs2c
@Florence:
Thanks for the link. Those complaining about Labor’s “small target” should watch the video, just to get their information right.
This is all just f*cked.
EFTPOS = Electronic Funds Transfer Point Of Sale.
At this point in time it includes 10% GST on (nearly) everything.
Why doesn’t scomo et al just do the same thing to the revenue transfers of apple, aldi, kraft etc etc and get the tax WE THE PEOPLE are owed. If the government took, I don’t know, 30%, the relevant corporations might be a little mor willing to play fair over what they really should be paying. If not we’d at least have some of their ‘hard earned, in the bank all ready.
Then there’s the sale of coal and iron ore. Our biggest buyer is Singapore. Yes our biggest buyer is a tiny island nation. Which has very favourable tax rates for selected companies. But it’s only the ‘dollars’ that actually arrive in Singapore after it’s ‘sold on’ elsewhere. Not an ounce of coal or iron ore ever arrives there.
These tax arrangements even have their own names. Try Double Irish With A Dutch Sandwich.
http://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp
stephentardrew, I take it that you have missed Shortens Strong response to raising GST.
Didn’t pull any punches at all, By the way he is on his way to Islands in our region, raising the issue of the effects CC on them
Suggest you might be interested in what Shorten has too say, by listening to his community forum on Saturday.
Outspoken on many many issues.
http://www.billshortencommunitybbq.com.au/stream
This has nothing at all to do with increasing taxation revenue it is a typical LNP ploy to shift more of the tax liability from the rich onto the lowest paid workers. People working part time who earn under $20k pay no income tax so they will pay 5% more of their income in GST (I doubt you can save money from such a low income) without any compensation.
Where is Dutton’s “Reward for achievement or effort” in this proposal?
Do any of the rich people who think they carry all of the burdens of the world on their shoulders when paying a reasonable amount of tax comprehend that without poor people they would not be rich? Without poor people they would not have anyone working for them, there would be no demand for their products and they would actually have to do a bit more than sit on their arse behind a desk giving orders.
I don’t live in the hills somewhere. And I’m not exactly isolated from what passes as ‘news’ these days. I don’t read any papers, but I scan the main stories on line. I didn’t see anything about Shorten’s opinion of the GST increase. Surely that’s exactly the point… he’s quietly preaching to the faithful…
Opposition Leader Bill Shorten said he couldn’t understand why the government believed raising the GST would solve all of Australia’s problems. https://au.news.yahoo.com/a/29962958/gst-lift-to-15-being-examined/
http://www.sbs.com.au/news/article/2015/11/01/looking-improved-tax-mixmorrison
I think Shorten speaks often enough but the Murdoch press prefer to publish only the LNP side of the story.
@mars08…the reason you don’t see what Shorten or any of the Labor Shadow Ministers are saying, the MSM do not report it. So usually no amount of you scanning the online versions of the Murdoch/Fairfax press will assist in your search for knowledge. The ABC/SBS is a smidgen better but not much. Private sector TV Channels in the main have had an ongoing love affair with the LNP since Howard’s days, If editors don’t assign staff to cover their appearances where ever, the country is not advised what is being said by the alternative Govt.
Labor send media releases to all MSM news organisations, shock jocks etc but again, same story not interested..
http://billshorten.com.au/category/transcripts
Shadow Ministers and local MP’s do make use of their ‘local’ radio stations and metro radio usually have guest slots once a week for in the main, Cabinet Ministers and Senior Associates outside Cabinet but its hard going for big city local Opposition MP’s
The Guardian is usually balanced with a center left lean which I am sure you are aware of.
I have been a critic of Bill Shorten in some areas, Asylum Seekers mainly and too much trying to be seen as the friendly co-operative Opposition in matters of welfare payments but he did make a pronouncement re the GST
I typed into Google ‘Bill Shorten responds to GST increase’ and the first two headings were
https://au.news.yahoo.com/a/29962958/gst-lift-to-15-being-examined/
http://www.huffingtonpost.com.au/2015/10/31/gst-hike_n_8443126.html
That is the name of the game in this present news environment, one can be critical of Bill Shorten when we know what he is saying and disagree but generally unless you receive his and his colleagues Twitter, Facebook posts or go to their personal websites, as in
http://billshorten.com.au/ then we are as mushrooms
So it is rather hard on the Leader of the Opposition to accuse him of only ‘preaching to the faithful’. Not the case.
And only 25 cents for my personally signed copy of this post (with apologies to the late Peter Sellers & Bloodnocks Rock n Roll)
@David… many thanks for the clear and concise explanation. So….if the ALP is really doing all it can to get the message out… and it’s still not being received by the public… it’s pretty much game over.
mars08 Shorten is finish because you don’t make the effort to listen, Says more about you than Labor.
Seems Shorten is going straight to the people That community forum yesterday is to be a regular happening up to the election.
Drew big crowd NOT filtered, opened to the public.
Shorten took all questions, answered fully. l will be attending, if one comes near me.
No stunts either.
I wonder why when it comes to politics, many believe they have to be spoon fed.
FnF… Open to the public eh? So i wonder who showed up? Like i said… preaching to the faithful. Without broad and consistent media time, the message won’t get through.
Florence, they are trying, but not as to the right issues in the right way. They haven’t been bold enough.
So, someone must think mars8 “lives in the hills”
Is this under a piece of galvanised iron, a wurlie or humpy, probably next to a gum tree that gets a big hug everyday, eats mung beans.
Let me tell some of you, pigeon post is an underated form of communications, too.
As for the thread, apart from kutica, who fails to understand the nature of “the debt”, comments seem to me pretty relevant with different components and some shades of grey.
Even the Canadians have had the wit to get rid of the F35’s Wtf is WRONG with our politicians brains?
Or is someone else pulling strong and invisible strings… who could it be?
mars did you bother to listen over 1 hour answering questions, Yes even from Labor doubters
I suspect it would not matter what Labor said or did, some will find criticisms.
Of that I am sure.
Paul what issues were not raised today. What would you like to talk about.
It is a long time since I have seen any politician stand before a large audience, take on questions from all.
Love his ability to take three or more at once, then proceed to answer, without faltering
PS I have never been a great fan of Shorten but the more I see, the more I am impressed That includes following TURC closely.
Florence, not sure what you are getting at.
Perhaps you are barking up the wrong tree. Re read my post and also other commenters remarks.
“but not as to the right issues in the right way.”
What issues do you wish to see addressed? Maybe I was messy in the way I asked.
In a way FnF is right. I will never be impressed by the ALP until I see a marked step back toward the left. By that, I don’t mean vague, trite promises… I mean policies enacted as a government.
So, the fact is… I won’t be voting ALP for the foreseeable future. They have lurched too far to the right in recent years. I understand that the ALP is the only realistic alternative in our system and will probably remain so for the rest of my time on earth. But, these days, I cannot bring myself to vote for them. My vote will be directed towards the left of centre, and if the ALP wants to snag it, they will have to make some concessions to the parties at that end of the spectrum. I simply cannot accept the lesser of two evils.
Until they DO something truly different and progressive, your statement remains valid.
mars08, that is very honest, a view you have every right to hold My problem is, what is this left that many want to go back to. Is it possible in the global world we find ourselves today,
I am in my seventies I am not sure I want to go back to that era. Whitlam was right, when he said it was time.
I just don’t find terms left and right mean much in today’s society. That coming from a lefty.
I just think it is time we stop using terms Labor values. Time to explain what one means.
Florence nee Fedup:
Shorten’s problem (which has become Labor’s at large) is that there have been so many instances of: “we agree in principle with…” ________(fill in the bank) LNP policy that it’s created a perception that Labor stands for nothing.
Whether it’s corporate racketeering agreements, stigmatising pensioners with “welfare card” sequestration, revoking people’s citizenship, etc., etc., the best we get from the present Labor “leadership” is: but, but… we “won” some (generally paltry) concessions. Bones the LNP was prepared (and hoping) to chuck out to the whining dogs anyway.
Whatever the reasoning on any one particular issue might be, the bottom line on it is that the product as a whole, as a repeated process- inflicted on constituency after constituency, is not going to sell.
The Greens also bear a mention in this context, because the present party leadership seems somehow to think that carrying on endlessly about “evidence based this or evidence based that” is going to sell. It’s not. That’s what we do in the backrooms, workshopping and formulating policy looking for good outcomes, with the wonks.
It’s not by itself going to ignite movements, despite the best wishes and intentions of those who still cherish the belief (against all evidence to the contrary) that we still live in an Age of Enlightenment- where in all the myopic glory of hindsight, our forebears are seen as “rational actors.”
All these comments & not a mention of all the corporate welfare in the way of subsidies that the mining industry receives from the government that is worth many billions of dollars…repealing some of those could make a huge difference to the budget.
For quite some time, i was waiting for the ALP leadership to do that. Then I lost interest.
mars08.I am interested in hearing from you an explanation of the Labor values that you say no longer exist.
As for Shorten, I believe he played with Abbott’s mind since the last election By not opposing him at every turn, left Abbott know where to go Abbott can’t operate without being in fighting mode. Also the public is past politicians saying no, fighting everything, for the sake of fighting.
Shorten is now speaking up, fighting back. Shorten is also making sure the fights he takes on are issues that are worth fighting for,
Ok, FnF: the F35, Data Retention, civil liberties (including for detainees in detention camps) Public Broadcasting (deafening silence), backing the government on theidiot terrorism scare nonsenses, an anti environmental stance typified this weekend by the Gary Gray response to Gas Fracking, post George Bender and privatisations.
These I add to Jexpat’s list. Like Mars 08, I have waited for a long time for the ALP to stand up on the REAL issues that burden our society.
Yes, I agree we need better information, even where Labor stands. They are policies I believe. I understand that
What I am not clear about, what are the Labor values many talk about.
SAD! An INDICTMENT! I never wanted a GST…for the very reason that it was way too easy to see how our beloved pollies could simply ramp up taxation by increasing it and broadening it’s application…the reality is that we have a tax system that is so poorly applied that the cash economy remains rampant and continues to grow…aided and abetted by any increase in GST. When are foolish Aussies going to stop slapping each other on the back in congratulating each other on demanding and receiving cash payments on the basis that they are successfullyt ripping off the government ……collectively we are all effectively “the government” …it’s you, your children, grandparents and parents that are effectively funding the great Aussieland – land of the rort? When you have politicians ignoring this and at the same time awarding themselves gross increases in renumeration and improperly accessing the public purse – at the expense of the average man, when you have the protected legal fraternity from which the majority of “our” politicians are derived, maintaining a compaq with fees the prevent the average man from obtaining justice – you simply don’t have equitable or democratic governance…just pigs with snouts….. Politics bah humbug!
Shogan, not only no mention of the subsidies but no mention of the only form of taxation that is both just and efficient – resource rent taxation, like a MRRT but the most significant being land value taxation.
This is a just tax because it is based on the principle that The Earth (land and resources) should be the equal and common birth-right of all humanity.
Land rent that is not collected as tax is capitalised into the price. The buyer pays it anyway either as an annual tax to the government allowing reduction in taxes on production, or in decades of debt serfdom to the bank with interest.
Land tax was written out of Labor’s policy platform single-handedly, not voted out, in the 1960s.
A link to a brief letter to Bill Shorten:
FnF, for my part I understand the problem with press and media. The bias has always been there.
The list and opinion offered by Paul Walter seems about right. I will just add the treatment of asylum seekers and failure to support a federal ICAC. And that’s just off the top of my head…
Florence nee Fedup
I agree people were sick of Abbotts no at any cost attitude, god governments are created by good opposition who force the hand where appropriate for the good of the country. All Abbott did was force Labor to do what Howard should have like giving pensioners an increase.
Like you I wonder what people refer to as “the Labor values” because the world has evolved and as you stated it has shifted to the right so middle ground has shifted as well and Labor are still to the left of middle. To me people have 2 choices, vote for Labor to have a fair idea of what you will get and be in a position where your voice is heard (doesn’t mean yelling will get you what you want) or vote any way you wish and see what pops out of the lucky (or not so lucky) dip (last time we got Abbott).
Sally K owning your own home, the great Australian dream is the only tax free entitlement you will get so why would you want to introduce land value taxation? That could force pensioners to sell their homes and make it even harder for new home buyers to get into the market. I read economists suggesting people rent and put more into superannuation but in the real world I would prefer to retire owning my own home without any superannuation.
I thought we already have land tax. What Labor has to do, Shorten is attempting to do, is control the agenda of what will be up front during the election campaign, which in Labor’s eyes has been done.
Focus on what is worth fighting for, which one has chance of winning Ignore the agenda the PM is saying the election will be about,
That means all issues that concern many, including me, have to be put on back burner
I wonder if there is someway we can tax the turnover of business, especially those who are sending profits offshore. Profits are too easy to hide, to manipulate. Might even get a the black money market that the GST was supposed to rein in.
interesting exchange of views
I to would like a return to Labor values
And what indeed are those Labor values?
I confess I dp not know but I have a link to Jeremy Corbyn the UK Labour leader and opposition to Cameron. Jeremy seems to me to represent the British Labour Party values of the 60s – in my view these are the values that I personaly wished our Australian Labor Party would adopt.
I believe theat Albo holds these values as I believe Penny Wong does. A number of other Labor MPs do also but they are the Left faction of the current Labor right factioned party which appears to be more concerned about promoting their own careers than representing their electorate or Labour / Labor values!
but yes I digress: What are Labour / Labor values; how about the word equality?
Equality of opportunity:
A fair days pay for a fair days wage:
A equal distribution of law:
Industrial equality via industrial laws that seek to equalise power:
A progressive taxation of all personal income – but No repeat No taxation for registered business enterprises:
There os more but no to list them
Maybe Labor values about creating a civil and just society. A society where the rule of law and all it entails reigns supreme.
Florence nee Fedup
Land tax is applied to the value of any property you own or jointly own that is above the land tax threshold currently $432,000.
http://www.osr.nsw.gov.au/taxes/land
Considering how high house prices are nowadays $432,000 is probably to low but the majority of people do not pay land tax. To make everybody pay an extra $100 and 1.6% of the properties value on top of council rates (and the fire levy in Victoria) would force many pensioners out of their own homes.
stephengb2014
Equality of opportunity:
A fair days pay for a fair days wage:
A equal distribution of law:
Industrial equality via industrial laws that seek to equalise power:
A progressive taxation of all personal income – but No repeat No taxation for registered business enterprises:
I agree with the values you listed except for “No taxation for registered business enterprises”.
We need a resources tax and in a user pays society business must contribute their fair share.
We have to be very careful of what we wish for, if Labor go to far to left they will never be elected so some compromise is better than putting up with LNP governments who screw the workers at every opportunity. It is desirable to care for refugees, provide foreign aid and solve the problems of our nation but sometimes the best way to do that is to do what is best for the majority of people so they are in a situation where they can afford to help others. Since Howard become PM and started to screw workers and reduce disposable income people have become less generous toward others, when people become obsessed with their own problems they have no time or ability to be concerned about other peoples problems.
Wally, ask why it is that people after a long working life should be so poor they have difficulty with basic bills like rates while the automatic tendency of our economy is to concentrate wealth to the top 0.1%. It is because the economic rents of land and resources are privatised while labour and labour products are taxed.
Many ways have been worked out to avoid hardship to low income earners from a land tax eg defer payment until the property is eventually sold, which may be after it is inherited.
Any change has to be done very gradually and the best option is to start with substituting stamp duty and existing land taxes with a broad based land tax as the 2009 Henry review recommended and the ACT is doing on a 20 year time frame. Also taxing a small portion of the uplift in land value from the windfall gains to nearby land values when new transport infrastructure is built, as Turnbull recently mentioned as an option to be considered.
There are many sites that do a better job of explaining it than I can. I suggest you read the work done by Prosper Australia – prosper.org.au
Also articles on Macrobusiness such as this one by Catherine Cashmore:
http://www.macrobusiness.com.au/2014/06/capitalism-democracy-and-land/
Stopping all further consideration of the arguments for land tax on the basis of the “poor widow” objection has been of inestimable benefit to the wealthy and powerful elite.
Sally K
My wife and I have worked our arses off, struggled due to a workplace injury and gone without to put a roof that we own over our heads. At the end of the struggle we own our house and our fortunes have improved, why should we pay for it again or go into debt that will erode our legacy to whoever we decide to leave our home to?
I want a country where everyone pays their fair share of tax and earns enough to realise the great Australian dream like I have. I don’t expect it to be too easy but it should not be impossible. There is nothing wrong with the system we have except that house prices are not comparable to incomes. Instead of buggerising around with what is not broken lets fix the cause of the problem – GET RID OF THE CLASS DIVIDE.
Wally my husband and I have done the same and I suppose if the 20 year ACT plan happened in Qld I would eventually have to pay a 1% land tax on my home. Not absolutely sure of land value but I expect the tax would be about $3000 per year. That is tiny in comparison to the amounts we have shelled out to assist our two children into housing. Financial assistance from the older generation is now nearly a compulsory requirement for first home buyers in the capital cities, certainly in Sydney and Melbourne. The system for that basic requirement, shelter, is definitely broken.
Land is a monopoly because location is critical – people want to live within 10 to 15 km of their work, not 40. We all have to have shelter and the result is that all productivity flows into the land values, because people will pay whatever the banks will lend.
Land price is net of taxes and rates. It is the tax the buyer pays anyway, as government revenue or as mortgage with interest payments. In a situation of adequate land value tax, housing would be more affordable, and the population less indebted, therefore having more disposable income to support business and employment. Texas USA has a 2.5% property tax (should not be on buildings but you can’t have everything). The result is housing is not a speculative investment so prices are affordable, they did not have a housing bust in the GFC, and business is thriving.
A Catherine Cashmore article mentions Texas:
http://www.macrobusiness.com.au/2014/04/australian-property-through-foreign-eyes/
Sally K
“I expect the tax would be about $3000 per year. That is tiny in comparison to the amounts we have shelled out to assist our two children into housing.”
You have a choice to help your kids or not, if you couldn’t afford to you wouldn’t but the tax you suggest becomes a burden on everybody and in my case (and kids) would make home ownership harder. Three of our kids live interstate and I do not have the cash flow to help them directly but when my wife and I die each kid will get 20% from our house. This may help some of the kids buy a house and for others it might help them manage their mortgage, I don’t know what will be but if I have to find $3k a year I would not be able to stay in my home and my kids will get no help at all toward owning their own house. Just because it seems like a good idea and suits your agenda doesn’t make it workable for everybody. Like most taxes other than income tax with wage brackets it would have more impact on poor people than the wealthy people.
What frustrates me with all of these grandiose ideas is they don’t fix the underlying problem, land is not too expensive when you look at the cost of subdividing and servicing allotments. The problem is that the lowest paid workers income has fallen dramatically over the last 20 odd years. Loss of spending power has affected 90-95% of people, sure we can afford plenty of Chinese trinkets and gadgets but we can no longer afford to purchase our own locally manufactured products. Not so long ago someone on the basic wage could afford to have a stay at home wife, pay off a mortgage and have a reasonable second hand car in the garage, nowadays it is difficult to achieve this with 2 people working for the minimum wage.
I agree with you that housing has become unaffordable but instead of changing what isn’t broken and risking unforseen or considered side effects lets fix what is wrong. A good start would be to stop public companies being rorted for millions by greedy executives and CEO’s, if they were not so greedy the rest of us might earn enough to live comfortably.
Wally, if the cost of subdividing and servicing allotments was the sole cause of high land price why do investors seeking the greatest capital gain buy in the first 6 to 8 km of the city centre? Such subdivisions were done as much as a century ago. The largest developers keep land price high by drip feeding onto the market from their 14 to 18 years of stockpiled land supply. A state land tax on this land hoarding could encourage land release but the state governments want high land prices to keep stamp duty high.
The tax system through NGing and little or no efficient taxes on land actively directs investment into renting out old houses, which does not increase supply, just drives up prices and turns would-be home owners into renters.
The long term social consequences are grim. Renters on retirement incomes will find it hard to even afford share accommodation. When the superannuation system matures it is estimated that 85% of people will still be dependent on the pension which is becoming increasingly inadequate. Those pensioners who have homes will be reverse mortgaging them back to the banks, so much for the kids’ inheritance.
This article shows that escalating property values have worsened inequality in Australia because poorer households hold very little property
Sally K
People hoarding land as you put it do pay land tax as per the link I posted earlier, in NSW it is levied on any property that is not a persons principal place of residence. I believe other states have similar land tax. “You pay land tax when the total value of all the Victorian property you own as at 31 December, minus exempt land such as your home, is equal to or exceeds the threshold of $250,000.”
“The largest developers keep land price high by drip feeding onto the market from their 14 to 18 years of stockpiled land supply.” If developers flooded the market with land they would not be in a position to recoup the money it cost them to subdivide and service the land within a respectable time frame so the bank or financiers would make more money and force the price even higher.
“The tax system through NGing and little or no efficient taxes on land actively directs investment into renting out old houses, which does not increase supply, just drives up prices and turns would-be home owners into renters.” I disagree, not totally with your opinion but like many people your view of negative gearing and its full affect within the market place is very narrow. Demand for housing generates massive amounts of employment, it doesn’t matter if people negative gearing buy new or established it increases demand. Without negative gearing there would be much less rental housing available so the price of rent would increase and any increase in land tax would increase rent.
If you stamp out or deter negative gearing where do you draw the line, most business premises are negative geared wether they are owned by the occupier or investor/s, do you stamp out groups who invest in property? Superannuation funds invest indirectly in property and negative gearing of these properties doesn’t give a tax deduction at the time of expenditure but a loss accumulates that can be offset against income in the future. Offsetting losses against future profits applies to all business entities, could you imagine any new businesses being started if the losses in the early stages cannot be offset when the business starts to make some money?
“The long term social consequences are grim. Renters on retirement incomes will find it hard to even afford share accommodation.”
So why would you encourage something like land tax that could force people who already own their homes into rental properties?
“When the superannuation system matures it is estimated that 85% of people will still be dependent on the pension which is becoming increasingly inadequate.”
The pension is adequate for people who own their home and the only reason it will become more difficult is if we allow real wages to be eroded even further. As stated before we need to do whatever it takes to stop the rich taking more than their share and increase the basic wage. If wages increase super contributions increase and the pressure on government support systems is reduced. Increasing taxes on lower and middle class families does not solve the fundamental problem.
Urban sprawl has become a policy concern of national prominence. Land or split-rate taxes are one potential way to address this issue. In theory, such taxes can lower the land/capital ratio. This in turn can raise the density of housing units where it is applied, if the average quality/size of each housing unit does not increase by enough to offset an effect on the number of housing units. This research explores these issues, looking at a panel of land uses and demographics in Pennsylvania. We confirm the theoretical prediction that the capital/land ratio increases. We also find that the primary effect is in more housing units, rather than bigger or nicer units, suggesting the split rate tax is potentially a powerful anti-sprawl tool. http://www.lincolninst.edu/pubs/1372_How–Smart–is-the-Split-Rate-Property-Tax-
According to this research the major benefit is higher density housing reducing urban sprawl. This has many obvious benefits by reducing the need for new infrastructure and extending transport routes but it also has many disadvantages.
Wally,
the large developers who dominate the market land bank massively and they are the price setters for the public including smaller developers. This is to the disadvantage of those smaller developers whose motivation is to build and sell, not speculate. They will have to pay higher prices for sites so there will be fewer of them so less choice and competition for consumers.
Figures can be obtained for the share market listed land developers. Their 2014 annual accounts show they have 272,000 lots in development, with a disclosed end value of 81 Billion. Lot sales by the listed developers are around 25.7% of the about 65,000 national residential sales in the same period.
As a multiple of the past year’s sales, listed developers hold approximately 14.9 years supply, which suggests this is where maximum land banker returns are currently found.
The figures are from this article by David Collyer which is one of a series:
https://www.prosper.org.au/2014/10/31/land-banking-profits-during-a-housing-supply-crisis-englobo-2014/
He says “While developers can rightly argue they are constrained by government planning controls, in practice, this is a feature not a bug. It provides an extremely high barrier to entry, confining development activity to those with deep, patient capital and the expertise to negotiate effectively with government – over years in some cases.
Land under restrictive planning conditions switches from being regarded as a resource to be allocated to best use by the market, to a speculative commodity where motivations become inverted; because once the prices have started rising, the incentive is to withhold it while prices rise some more.”
Re negative gearing, over 90% of investor mortgages are for established dwellings rather than new construction – no new employment in that. It substitutes homes for sale into homes for rent. The added housing demand is helping to force up house values to the detriment of would-be buyers. Saul Eslake has estimated that NGing adds 10% to house prices. $50 of a $500000 house is a lot of extra debt and interest.
There are a lot of lies promoted by the FIRE sector and politicians re NGing. Macrobusiness has many articles with analysis of the lies. Links:
http://www.macrobusiness.com.au/2015/10/coalition-launches-new-negative-gearing-liar/
http://www.macrobusiness.com.au/2015/10/why-kelly-oliar-loves-negative-gearing/
For wages to increase to the income to house price ratios of 30 years ago, unions would need a lot more power than they now have. Also with globalisation if wages did increase to that extent, that would accelerate the rate at which companies are shifting jobs overseas.
Both the property market and the labour market are being globalised.
Re land tax forcing people out of their homes all proposals such as the substitution for stamp duty, are very gradual with provisions for any possible hardship. The 2012 “Turning Gold into Grey” report on the economic potential of older Australians recommended this change because of the deterrent to mobility of stamp duty. Increase to the GST is far more a stress on the poor. Over time as housing affordability improved the young would be less dependent on gifts and inheritance from the older generations.
Your comment about business entities offsetting losses against future profits underlines the fundamental assumption and defect of our economic system – that we do not differentiate between man-made capital like buildings and machinery as opposed to what nature provides – land and its resources.
This article expands on this and its consequences:
http://www.progress.org/economic-depressions-what-causes-them-and-how-to-prevent-them
Obviously we have to agree to differ but I hope you will read some of the links.
Sally K
I have followed your links and they seem to be more opinion based than fact based. I find some of the opinions to be the opposite to what I know to be fact, for instance take the following paragraph from this link. http://www.progress.org/article/economic-depressions-what-causes-them-and-how-to-prevent-them
Thus, could it be that the high cost of land restricts the optimal functioning of the economy? Because the cost of land—and therefore the cost of location—directly affects people’s abilities to interact and connect with one another in the context of society, the expensive price of land has consequences that reverberate through the entire economy and inevitably lead to restriction in the production of wealth throughout society.
We know for a fact that after the GFC land prices in America dropped considerably and we know the trigger for the drop was peoples inability to repay the banks but this was caused by banks loaning money to people who didn’t have the capacity to repay the loans. The ability for the people to service the loans was questionable when the loans (in many cases were for 100% of the properties value) were established. The purchasers had no equity so the lenders were taking all of the risks.
Fred Harrison predicted that the high cost of land would cause the business downturn but we know for a fact that lending policies created the whole debacle. I do agree with much of what Harrison has written but not the way his analysis has been depicted in this article and it is most likely that the current downturn in the Australian economy is due to “land values over time become so expensive that too little wealth is left to pay for goods and services”. Other economists say that the money made by older people who sell their houses and/or down size compensates for this so who is right?
“Re negative gearing, over 90% of investor mortgages are for established dwellings rather than new construction – no new employment in that”
I strongly disagree, once again you need to look at the broader picture, often the people selling their home are building a new home or buying a rig to become grey nomads. It may take 3-4 home sales before a new home is constructed but demand for property will eventuate in new construction at some point.
“For wages to increase to the income to house price ratios of 30 years ago, unions would need a lot more power than they now have. Also with globalisation if wages did increase to that extent, that would accelerate the rate at which companies are shifting jobs overseas.”
Increased wages could make locally produced goods more affordably, increase sales and make local manufacturing viable. I don’t believe locally produced cars are too expensive, unfortunately the market shifted dramatically and the investment to retool to make what new car buyers want was not viable. I still see strong demand for falcons and commodores in the second-hand market, most private owners of these vehicles do not buy brand new. The decline in sales to politicians, government fleets and government departments (all I believe should be compelled to buy locally built cars) has played a big part in the decline in local car sales and it has left a void in the used car market. Can you imagine what would happen if land/house prices dropped dramatically? We would have our own financial collapse, the only way forward is to increase real incomes and minimise price increases on housing.
“land tax forcing people out of their homes all proposals such as the substitution for stamp duty, are very gradual with provisions for any possible hardship.”
Lets be blunt the purpose is to force old people out of their homes so the land can be redeveloped with high density housing, the developers and the banks are the main beneficiaries. Decentralisation would be a much wiser choice, the infrastructure in rural centres could be expanded to cater better for the existing population and the influx of new residents. I am always weary of what economists they have a tendency to be more concerned about financial outcomes than the impact on people.