Taxation and Spending Articles
Long on Spending, Short on Discipline
Quadrant Online, 12 May 2018
Governments normally sugar-coat budgets, packaging a combination of give-aways and, increasingly, cross subsidies, with boasts of how much of our money they are returning to us. Fifteen years ago, Bill Shorten and Malcolm Turnbull sparred over whether the top income tax rate should be 30% (Shorten or 35% (Turnbull).
Governments normally sugar-coat budgets, packaging a combination of give-aways and, increasingly, cross subsidies, with boasts of how much of our money they are returning to us. Fifteen years ago, Bill Shorten and Malcolm Turnbull sparred over whether the top income tax rate should be 30% (Shorten) or 35% (Turnbull). Neither, of course, had any resolve to confront the lower level of spending that such reduced funding would entail. Neither now seriously proposes a maximum less than 46%.
Australia’s policy dice is loaded in favour of more spending and regulation. Major expansions in recent years have been on education, people with disabilities, the national broadband network (NBN) and renewable energy. Even those rare politicians who are genuinely concerned about excessive spending are reluctant to oppose those lobbying for such measures and the votes they promise. Nonetheless an injection of personal responsibility would be useful even if limited to the most egregious and
This year, the Commonwealth’s mid-year budget review shows some progress towards reducing the nation’s $30 billion deficit. That was thanks to increased taxation revenue – mostly due to exports from mining that, ironically, have had to defeat the headwinds of draconian regulatory impediments. Lower government spending has made a trivial contribution. Savings agreed by the Senate amount to about $100 million a year (the Senate rejected another $500 million a year proposed savings). Th
In Korea earlier this month, President Trump contrasted North and South Korea which in 1950 had similar levels of income per head. Today South Koreans, having embraced free markets based on low taxes and secure property rights, earn 40 times more than their northern counterparts. The North Korean regime deliberately stifles private initiative. Others – almost all the world’s poorest countries - do so with punitive regulations and high taxes on entrepreneurial income, especially on company prof
The debate over the future of the economy and the Liberal Party in government has got a lot of air-time with Tony Abbott continuing to make Headland speeches. Abbott is claiming the mantle of Menzies, and points out that our arrival at a situation where 50 per cent of households pay no net tax resonates strongly with Menzies warnings about the risks of democracy forming coalitions of “leaners” to pillage the earnings of “lifters”. As Menzies put it in far less serious “leaner” incursions than
IN this week’s federal Budget, the Coalition implemented policies established in the Rudd/Gillard years. The expansions in health, education and welfare budgets — now comprising two thirds of spending — were confirmed. Over the next four years, annual spending will increase by $50 billion to $340 billion — a levy on the average non-government worker of more than $30,000 a year. Similarly there is an acquiescence of the cost impositions from renewable energy policy, including attempts to lighten
Politician accuses central banker of profligate policies – man bites dog
Catallaxy Files, 17 October 2016
This month UK Prime Minister Theresa May warned the Bank of England that its policies had damaged the interests of savers, pensioners and the young. The Governor, fresh from campaigning against Brexit, fired back ‘The objectives are what are set by the politicians. The policies are done by technocrats. We are not going to take instruction on our policies from the political side.’ It may be a good idea to have an independent central bank. Such a body existed in previous times – it was called
Taxation of superannuation continues to be a hot-button policy. But it is treated as an isolated component of the tax debate, rather than from the perspective of a means both of encouraging people to ensure their own future and to provide the savings necessary to ensure the economy grows to allow such future income streams. Today, David Leyonhjelm pointed out that the government’s latest episode of how to tax this savings vehicle is one step forward and another backwards, while Robert Gottliebsen once again draws attention to the excision from punitive new taxes of one privileged group, the most senior public servants – the very ones who are drawing up the policy proposals. In this debate, as in so many others, the Grattan Institute continues to serve an invaluable purpose in offering policy prescriptions that provide a useful marker in defining what should not be done. Grattan downplays the importance of superannuation pointing out that it comprises only a small share (15 per cent) of total household savings.
My piece in today’s Herald Sun (“Spend plenty to buy nothing” subscription required) addresses the measures Australian governments are taking to prevent people producing things and earning income for themselves (much of which would also be syphoned-off by governments and used as bribes to secure their re-election). It notes the NSW Baird government got away with spending only $220 million of taxpayers’ funds to stop a coal mine, thus deflecting the hysteria that Alan Jones was whipping up. This
It was, I suppose inevitable. Hard on the heels of Philadelphia imposing a sugar tax on soft drinks to tax the fat poor in order to help them, along come The Greens revisiting their own policies of imposing a 20 per cent tax on the demonised products in order to tackle childhood obesity. It seems that the Greens are far better than natural parents at caring and nurturing – perhaps they should set up kibbutzes to ensure that infants are also more adequately schooled in “safe sex”, the Great Barrier Reef’s disappearance and how cheap is renewable energy. Oops, they already have those – they are called state schools!
All that blistering controversy about the $3 billion saved by retrospective changes to superannuation. Yet there is one item of news, issued on the same day as the budget, which demonstrates the fatuity of government and its addiction to senseless policy and wasteful spending. The Clean Energy Regulator (don’t you love the Orwellian names they give themselves) announced it was two thirds of the way to spending its $2.55 billion budget in issuing Australian Carbon Credit Units. These are used
A re-affirmation of small government, ideally including constitutional limits on its size and regulatory authority within the economy, is necessary if stagnation is not to become the way of the world. Or we could ape Japan's example and learn to live with little or no growth, not now or ever
There are surely more people than me who are skeptical of Elon Musk’s Tesla. Yes, Musk has shown himself to be a brilliant innovative entrepreneur with Pay Pal. And lightening does strike twice in the high tech field as Steve Jobs showed with his reincarnation at Apple. But in contrast to the Silicon Valley start-ups Tesla is surfing off the back of $5 billion in Obama government subsidies and still manages to lose at least $4000 per vehicle. And Tesla gets mighty shirty once subsidies are removed. It is taking the Danish Government to court for winding down subsidies that, as a result, its Model S will see a price increase from $A182,870 to $A378,000 in 2020, when the tax break no longer applies.
There is some great material on the Safe Schools furor published in Quadrant On Line as well as this piece by Kevin Donnelly “Welcome to the brave new world of gender diversity where biology no longer matters as one’s gender is simply a sociocultural construct”. There is so much been written that that there is little of value that can be added. But three things strike me. First the Safe Schools program is “supported” by 119 mainly gay, lesbian, bi, trans gender organisations. Did nobody else imagine that there could be that many? How do they differentiate their products to attract diverse types of activists? Who funds them? Obviously governments fund the programs they lobby for – activist groups rarely dig deep to do anything but apply pressure so that the rest of the taxpayer will finance their idiosyncratic preferences? What motivates people to give so much of their time to, as they see it, correcting the human architecture of Gaia/the Almighty?
The state of democracy is such that voters call upon governments to provide ever growing services. They also are irked about paying for those services but not as much as they are if the services are trimmed. Any increase in government spending will have economically deleterious effects but this is a secondary detail for politicians. Governments’ best means of staying in power is by introducing taxation measures that people don’t ascribe to them or which hit just a few voters who would not vote for them anyway. In the energy and carbon space we have:
Electoral expectations and pressure groups: our guarantees economic mediocrity
Catallaxy Files, 3 December 2015
For many, the replacement of Abbott by Turnbull meant more than a more electorally pleasing rebalance of oestrogen and steroids within the government administration. It meant that we now have a businessman who has a track record of personal commercial success and better powers of persuasion to bring a turbulent Parliament into line and bridge the budget deficit gap. But we should be under no illusions that all we need is a problem solver who will see the myriad opportunities and thread his way through to the optimal solution
Social Services Minister Morrison urged people not to hoard pensions saying the “purpose of providing tax incentives to encourage people to build up their super is so they can draw down on it in their retirement, not maintain it as a capital inheritance”. Requiring people to spend their savings carries a real risk that they will need to fall back on the state pension since we generally don’t know how long we will live.
Spending Like There’s No Tomorow
Published in Quadrant Online, 12 March 2015
Does the economy really need to hit the wall with a thud before our political class finally tightens the purse strings? With Joe Hockey's prescription no better so far than a pottage of half-measures and Labor's notions of fiscal management laughable, prospects are grim and growing darker
Earlier this week, Andrew Leigh the junior shadow Treasurer floated the essentiality of a carbon tax (and, oblivious of the collapse of commodity prices, a mining tax). Our man in Davos, Assistant Treasurer Josh Frydenberg was fast out of the blocks attacking the proposal which will surely prove more damaging to Labor than any setbacks the Libs have felt caused by Tony Abbott downgrading a Prince of the realm to a mere knight. Angus Taylor managed to spin Orwell, Hawke, Whitlam, Fraser and Santa Claus into a goring of the proposal today