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Whatever We Do, We Mustn’t Tax The Brain, Mr Hockey!

“We need to abolish the IRS and make the tax code fairer, flatter, and simple enough that taxes fit on a postcard.”

Ted Cruz, Republican Presidential Candidate.

 

“…our current tax system, which was designed before the 1950s, is ill-suited to the 2050s.

“As a result of changes driven by globalisation and the rise of the digital economy, Australia’s heavy reliance on income taxes may be unsustainable. This over-reliance is projected to increase further, largely as a result of wages growth leading to individuals paying higher average rates of tax or so-called bracket creep.”

Joe Hockey, Treasurer of Australia (and certainly not for sale, nor even for hire)

Well, we’ve moved the discussion to taxation.

And everything it seems is “on the table”. Last year, I remember Scott Morrison saying in interview that when it came to asylum seekers the current government had taken the “sugar off the table”. I remember it because he said it more times than he used the phrase “illegal immigrants”.

By the way, when are these people who have done something “illegal” going to face trial, or do the Liberals believe that people can be held indefinitely without trial. (Yes, yes, silly me, I’m forgetting David Hicks who was held because well, they had to hold him without trial because – according to Mr Howard – he hadn’t actually broken any laws, so clearly these “illegals” have no right to expect any sort of trial – fair or otherwise. I suspect the reason may be that they too haven’t broken any laws, but that’s just a technicality. Sort of like the technicality where Hicks was recently cleared of the charges!)

But we need to forget about those people in detention – I mean, it’s not like there was any march in protest on the weekend because there certainly was no reporting of it in “The Herald-Sun” – and have a chat about taxation. And everything is on the table. Just some bits are at the far end, and out of reach, like trying to extract more tax from multinationals or miners or people illegally avoiding it with dodgy schemes. The GST, on the other hand, is only out of slightly out of reach and if Mr Hockey remembers his table manners and says, “Would you pass the GST, please” to the Labor Party, he may have some success. Of course, he won’t say that until the Labor Party have told him that they’re interested in moving the GST, so I suspect that one’s going nowhere until after the election.

Of course, Mr Hockey is making some fairly interesting claims at the moment. Take last night on “The Project” where he said: “I got up at 5am yesterday morning and grabbed whatever looks long…”, before moving onto his assertion that people don’t pay GST on goods bought online from overseas. Mm, I seem to remember Gerry Harvey getting all hot under the collar because goods under $1000 bought online overseas didn’t attract GST, but apparently Mr Hockey seems to think that it’s all goods. And he should know because he’s Treasurer.

(No, really, Mr Hockey is the Treasurer. Ok, I know that it may be easier to believer the Christopher Pyne is an alien who is going to have babies with Ruby Wax – see Q&A, if that makes me sound like I’m on drugs.)

So is Mr Hockey talking about the law here, or is he suggesting that there’s a lot of non-compliance with the law? Surely, the solution then is not to say that people are illegally not paying their fair share of tax. I mean, would they do that if it was discovered some large company wasn’t paying the tax that the law required them to?

Oh sorry, I keep forgetting what year this is and who’s in power…

But anyway, in a moment that reminded me of the Tea Party’s desire to abolish the US’s Internal Revenue Service, one of the more interesting things I read about company tax was the idea that small business could pay “close to zero company tax”, but thay’d have to forgo certain things and maybe I read this wrong, but they included: “industry-specific tax breaks and broader concessions such as capital gains tax”. Mm, I can’t see how if you’re paying zero tax that forgoing a tax break is going to be a big problem. As for the concessions on capital gains tax, well for most small businesses that’s a long way down the track and may never eventuate.

I’m wondering if I should go to an accountant who’ll advice me how to become a small business, so I can tell any employer that, in future, I’m no longer an employee, I’m a company and therefore they can just pay my company and there’s no need for PAYG tax to be taken out of my pay… I mean, invoice. Ah, but surely such a thing would be illegal.

Yes, we do need to have a serious look at taxation, and we need to stop the petty political point-scoring. However, one of the concerns in the paper today is an article that tells us by next year, the “average” worker will slip into the second top taxation bracket. Let’s just ignore the fact that it’ll only be the few dollars above $80,000 that are taxed at this rate. Let’s ignore that one of our problems for the Budget is lower revenue. No, let’s focus on something that’ll make the average voter say that it’s outrageous and that I pay far too much tax. Let’s not – even with everything on the table – say, “Well, maybe this is only bad because we need to have a higher rate of tax for those earning extremely large incomes.” (Yes, I agree that there are probably more equitable ways of raising revenue… Maybe higher taxes on really successful mining companies… Or a tax on carbon emissions.) No, let’s have an article that feeds into the perception that we’re paying too much tax.

But before I join in the mature debate and actually consider whether there’s any equitable way to increase the GST (settle down, I only said consider it. I’m trying to keep an open mind here!), I do have to wonder that nobody is reminding the Liberals of John Howard’s promise that the GST would never rise. No, I don’t mean the one where he said that it would “never, ever” be introduced. As he explained, “never, ever” only means till the next election. No, I mean the one where he announced all these safeguards like the fact that ALL the states had to agree for there to be a rise. This – like that economic genius, Peter Costello decision to sell our gold reserves at bargain prices – doesn’t seem to be receiving much attention.

Or did that safeguard disappear after the election too?

 

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10 comments

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  1. stuffme

    I think there is a very real need for a “tax” overhaul. But there are many areas of industry and income earners who can carry the load, and must. People below the average wage should not have to shoulder the burden. Where is the MRRT, the carbon price? Oh yes, just another LNP failure like the GST. 10% just doesnt do it.

  2. Roswell

    The latest lot of opinion polls provide conclusive evidence that about 40% of Australians don’t have a functioning brain.

  3. Aortic

    Roswell and that includes the entire present government line up.

  4. Win jeavons

    If everything is on the table, let’s consider Higher taxes! Move the floor and the escalator when ever the median (no, not average, it is too skewed) wage rises. This actually was mooted in the 90’s, and makes sense. Flatter taxes , on the other hand, are just evidence of the bottomless greed of the already too rich. If your income is > than , say, 1 miilion$, 95% sounds a reasonable level. Too much wealth not only gives too much power, skews the cost of living for the rest, but destroys the resource base all life depends on.The argument about encouragement to work harder is total BS!

  5. Lyle Upson.

    i assume this is irony, comedy or some such… you are quite entitled to set up a small business to offer your services or products, you just cannot be the same entity as the small business. Your invoice needs to be a GST Invoice and any wage you earn from your small business most certainly will need to have PAYG deducted
    _______________

    I’m wondering if I should go to an accountant who’ll advice me how to become a small business, so I can tell any employer that, in future, I’m no longer an employee, I’m a company and therefore they can just pay my company and there’s no need for PAYG tax to be taken out of my pay… I mean, invoice. Ah, but surely such a thing would be illegal.

  6. Michael Taylor

    Lyle, most of what Rossleigh writes is satire. Though I sometimes wonder how close to reality it actually is.

  7. Lyle Upson.

    oh yes, satire, that was the word i was seeking. Just felt like making certain

  8. Kaye Lee

    I had an employee who I knew was struggling financially ring me to ask how much she had earned this year. She was going to knock back hours because she didn’t want to go into the next tax bracket. When I explained to her that, as Rossleigh points out, it was only the dollars above the threshold that attracted the higher rate she said “Ohhhhhh I didn’t know that”. I did a quick calculation for her to show her how much better off she would be doing more hours and she was so happy.

    Considering they raised the tax free threshold by $12,200 I think we can afford a bit of bracket creep. The second top bracket is from 80,000 to 180,000. Seems fair enough to me that they pay 37c for dollars over 80,000. Someone on 80,000 pays 17,547 tax which leaves them with over $1200 a week net earnings. (Just realised this does not include the 2% medicare levy).

    If we workers are going to contribute more then what about the 17.5% leave loading we get on holiday pay? That is a significant cost to business that perhaps we should give up considering they already pay 4 weeks holiday a year and 9.5% superannuation.

  9. Gilly

    Serious tax debate … huh … In one interview I saw Joe Hockey was not going to lead any conversation on the GST but was positively running from any conversation on negative gearing. Just how many in Parliament have property that is negatively geared Serious tax debate … huh …

  10. John Armour

    Let’s ignore that one of our problems for the Budget is lower revenue.

    Believing that revenue is the problem comes from the same faulty logic as believing spending is the problem.

    The only problem we have is a fairness problem.

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