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Tax And The Bleeding Obvious!

Ok, most of the focus on discussions about the GST has been about how it’s a regressive tax and how it affects the poor more than the rich.

But there’s one other thing in this debate that hasn’t been prominent in discussions or commentary. If the GST is widened to include items currently exempt, how will that affect Health spending?

Given that a large chunk of health spending is paid for by the various governments, will they just be charging themselves more, or will the rebates stay the same and it’ll be up to the patient to make up the difference. In other words, will it be a “price signal” by stealth?

Even if the government does the right thing and increases its share by the increase in the GST, this will obviously lead to a blowout in Health costs which, of course, will have politicians arguing that it’s just not sustainable. (Interesting that the blowout in the costs of offshore detention never leads to screeches of how this spending isn’t sustainable. On a state level, one never hears that the massive increase in the cost of running prisons doesn’t mean that the “tough on crime” policy isn’t sustainable!)

Either way, it fits in well with the Liberals’ plan to destroy Medicare. Why they want to do this is a mystery to me, but it’s always been their policy either explicitly or part of their hidden agenda since Gough first introduced it.

Of course, the likely scenario is that widening the GST base will be discussed, but dismissed on the grounds that it would make it unfair on those struggling with their grocery bills, health costs or school fees. And when, Malcolm magnanimously rejects broadening the base, then a mere extra five percent will seem the reasonable alternative – in much the same way that removing Abbott led to the big poll bounce. “Gee, Malcolm answered that question by talking on something vaguely related to the actual subject and he didn’t way anything about stopping the boats. He’s so much better!”

Of course, the Liberals do some very strange things. I’ve never been able to fathom why they stop any increases in the superannuation guarantee every time they get into government. Howard froze it when he got in, and Abbott did the same. Given their rhetoric about people needing to plan for their retirement and the government not supporting them, one would have thought that increasing everyone’s super would be something they’d be right behind.

When it comes to superannuation, I’ve always wondered why it’s subject to a flat tax of fifteen percent. I’ve always thought that it would be better if there was a threshold before it was taxed. For example, imagine the first five thousand dollars was exempt from tax and the rest was taxed at twenty percent. This would be a big boost to the lower income earners and people would need to be on an income of more than $100,000 before they were paying more. The tax on super earnings could also work on a similar arrangement.

But I don’t expect we’ll hear much about changing the taxes on superannuation. It’s about as likely as the government using the phrase “a great big tax on everything” when refering to the GST.

 

24 comments

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  1. Dennis portley

    Great article, proposes plenty of material for thought and comment.

    One matter which intrigues me is the fact that this government appears to have escaped the gross mismanagement of the past 2 years Scot free. Many of their disasters have been listed by other scribes and they are too numerous to mention, any one of which had they been enacted by Gillard or rudd, would have been sufficient to have them pilloried by the Murdoch press out of existence. And yet, all of these appalling actions have been swept under the carpet and they are now afford erred a clean slate.

    The oz public has reduced our politics to popularity contest with no regard to policies, morals or equity etc.

    Interesting to see if sanity returns

  2. RosemaryJ36

    Rossleigh – surely the opposition to increasing the superannuation guarantee is because it requires the employers to make a greater contribution to the superannuation of their employees, so eating into profits to distribute in dividends to grateful shareholder who would then increase the payments received by directors.

  3. Kaye Lee

    I so agree Dennis. Turnbull has somehow convinced everyone that we’ve had a change of government without doing anything (except getting rid of knights and dames) and people are so relieved that Abbott is gone, they no longer care about the damage that has been caused.

  4. win jeavons

    Government of the people , by the people, for the people ? What a lovely dream ! Yet is that not what democracy is SUPPOSED to be ? It is appallingly obvious that this is NOT what we are served up at this time . So many rubbish traditional religion ( which had many good features ) yet subscribe blindly to the religion of ” the MARKET” , which appears to be quite amoral and self-serving.

  5. king1394

    When the original GST was brought in, it replaced various sales, wholesale, and ‘luxury’ taxes. I seem to think that there were quite a few products that became cheaper. An example was new cars were not taxed as steeply (and second hand ones copped the new tax)
    A further increase of 5% will bite more deeply because there will be no such offsets.

  6. Kaye Lee

    They were talking about getting rid of some state taxes like stamp duty and payroll tax but then Morrison makes inane comments like “The Australian people, I don’t think, will cop any changes in the tax system just to give the states a bucket of money to spend it as they are now.”

    “When you have the situation where the average wage earner in this country next year is going to be in the second-highest tax bracket, you know you have a problem.

    “We need to have this conversation with Australians saying you are getting taxed more than you should be, I would like you to take more of your pay home.”

    What a crock of bs. He wants to hike up the GST to fund election year tax cuts rather than giving it to the states so how the hell are they going to make up for the $80 billion he cut from education and hospital funding?

  7. Kyran

    When will the penny finally drop? They are the government.
    Ok, two primed miniature’s, two treasurer’s, a couple of broader farce miniature’s and a rotating cabinet. But we have now had more than two years of these git’s running around asking for ideas on how to run the economy and country. It’s to my regret that I am old enough to remember when governments had a plan, a vision, a belief. This current shower of wasters is nothing more than aspirants in a popularity contest. The Mark Twain reference reminded me of another wit, Oscar Wilde. “Some cause happiness wherever they go; others whenever they go.”
    Thank you Rossleigh, take care. Apologies for the plagiarism, Mr Portley and Ms Lee

  8. Jason

    What I find ridiculous for too long is the 15% flat tax on super as well. Why isn’t it a 15% reduction off the tax rate applicable for the employee. That way low earners below the threshold actually get 15% extra and very high earners don’t get as much advantage as they do now. Have a maximum limit on super contributions (with a tax advantage) per year that’s reasonable and that’s it. Fixed.

    Of course that removes the massive tax dodge to the richest that Howard and Costello wanted so not possible. Sick of the constant funnelling of money to the top.

  9. Pat Willoughby

    Everything is on the table but it would seem the table cloth is covering everything except the raising the GST option.Surely we are not going to fall for this bullshit?How ever one thinks with our courageous media it is all but a done deal.

  10. DC

    The stupid like slogans so lets give them one simple enough for them to understand. CARBON PRICE BEFORE GST!

  11. zhen

    welcome carbon tax back instead of raising GST ( cost poor householders only 1/3 of GST will take away )

  12. Anon E Mouse

    I am getting the impression that talk of increasing the GST is a smokescreen. All this talk about it keeps people discussing anything else – like the royal commission into unions …

    Something is cooking.

  13. mmc1949

    Why get rid of Medicare? More profits for the mates in health insurance and running private hospitals. Often American companies. No matter if we Americanise health, the wealthy mates will still get health care.
    Too bad if people like me miss out … and then will be pressured into accepting euthanasia. How cheap is euthanasia compared to health care?! Winner (for the wealthy, saving them tax)!!!

    I think I was better off vomitting over TAbbott than I am now, being depressed over MTurnbull 🙁

  14. mark delmege

    I’ve got a three word slogan

    Mr fifteen percent

  15. mark delmege

    .

  16. Florence nee Fedup

    Seems Abbott might demolished private health insurance not Medicare. According to Lee, are leaving in thousands.

    Let’s be clear about one thing from a woman who reared her family in the 60’s70′ private health insurance didn’t work. Going to a doctor was not for many. Even with insurance, most struggled. Didn’t cover everything.

    Whitlam took that chain off the necks many families with Medibank. As with most things Labor managed to bring in, they have to do it twice. Later Labor government bough universal care in the guise of Medicare. I suspect they won’t manage to kill it.

  17. Florence nee Fedup

    win jeavons, didn’t see anything about government benn for the corporate world or the economy.

  18. Florence nee Fedup

    It is not Morrison money to give the states, States are responsible for most government responsibilities as health, law, education, roads, transport, electricity, water, sewerage, etc. The things we need to create a civil society.

    To pay for these amenities, under the constitution, the states had power to raise their own revenue from income tax. During the 2nd world war, for convenience sake, the states handed their income tax powers to the federal government. In exchange, the Federal government would raise taxes ON BEHALF of the states.

    Mr Morrison might be surprised to know, the Federal government is not more powerful than state government, He is not responsible for the money they spend or don’t spend. We elect state governments for that reason.

    Over time, the Federal government seems to be taking to itself power that belongs to the states. This is bad. All governments should be able and responsible in raising the money they spend. Taking back taxation power would correct this, but sadly in this age wouldn’t work.

    The GST isn’t a state tax. It is a tax that was passed under Federal law. The Federal government can repeal or change it anytime they like.

    The states need to have away raising their own money, where they are not beholden to any PM.

  19. Florence nee Fedup

    Maybe time states got together, workout what they need to provide the services they need. They then should direct the Federal government to raise the amount through the income tax system. Federal government could denote the percentage that goes to the state when tax is collected. Would be end story.

    Voters will as in all sovereign government hold the states to account at election time. Not role federal government to do so.

  20. Florence nee Fedup

    Personally I believe we should revisit roles of states and federal governments before attempting to reform taxations.

    Federal government really have no role in many areas they have extended their claws into since Federation. I suspect the Founding Fathers had many things right.

    Many Constitutional Issues have been ignored since the days of Whitlam. The Federal government has moved into areas that under the constitution was deemed responsibility of states.

    Why so we need Federal Department of Health, Education and many others?

    Now we have Federal government attempting to take over policy creation in these fields. I am not sure what they see the role of states as. I suspect the likes of Abbott believe states are there to carry out his wishes.

  21. Zathras

    The coalition has never been in favor of employee-funded superannuation and have only paid it lip-service.

    On one hand they talk about its merit by reducing the number of potential pensioners but on the other they see it as an impost on employers.

    One of these views is long-term and the other is more immediate and it’s easy to see what view they take.

    I’m on the verge of becoming a self-funded retiree myself after paying superannuation for over 40 years but as the time approaches they keep moving the goalposts.

    A 5% increase in GST will effectively reduce the value of my savings by 5% and who knows what further changes lay ahead in the next few years. Widening the GST may go way beyond that potential 5% slug.

    It’s now reaching the stage where I’m considering retiring, living it up for the next ten years and then putting out my hand for the pension anyway.

  22. seawork

    The tax on trading called the “Robin hood tax” is a great way to raise money for important issues and only effects the rich end of town.
    Surely this would be a better option than raising GST?
    But then it is not in the Liberal ideology where it is better to tax the middle and lower class earners so that the beg end of town can continue to make big bucks and then spend some on buying liberal pollies.

  23. Wally

    Florence nee Fedup

    “Personally I believe we should revisit roles of states and federal governments before attempting to reform taxations.”

    Very good point, we are over governed, as well as going through all the red tape to get something done the Sate and Feds have to agree.

  24. Florence nee Fedup

    Not sure, under the Constitution as seen by Founding Fathers we are over govern. What has happened since federation, the relationship between the states and federal sovereign governments have changed.

    Over time the Federal Government have usurped or intruded into roles of the states. This has in MHO led to waste and interference in rights of the states.

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