Advice for Journalists on Tax Summit

by Bob Carr

 

Won’t take long. Just some very quick advice, pushing you commentators in a skeptical direction especially with the interest groups and the rent-seekers buzzing around Canberra like flies.

First, imagine yourself in a meeting of the budget committee. State or Federal. The demands are endless. For more services and tax breaks, and the population is ageing. But more important: people want a better quality of public services – air conditioning in classrooms, noise barriers on highways, wheelchair access on buses, touch screen terminals on hospital beds, special education teachers in greater number, lifetime care for disabled, faster and fuller investigation of child abuse, more highly trained staff in child care and fire alarms in every unit of public housing.

By the standard of any previous age, we want a gold plated public service.

Well, folks, you don’t get it without robust tax revenues. If France and Germany have got health systems better than ours – and I’m not altogether sure they do – it may be related to the tax rates they pay. All the above enhancements are damn expensive. They are funded by tax revenues.

William Gladstone, steering it onto the statute books, called income tax “a mighty engine of reform.”

When the interest groups turn up and start pleading for reductions in income tax or stamp duty or payroll tax you are obliged to ask one question : how will you replace the lost revenue? And don’t accept vague references to cutting duplication or government advertising or finding savings – as if nobody from either side of politics has thought of that one.

You only get big licks of savings from reducing transfer payments, that is social security. Wayne Swan has done terrifically well in winding back middle class welfare but even that bought howls of protest from the Opposition and part of the media.

Demonizing payroll tax or stamp duty is easy but mostly it is a knee-jerk dismissal – “tax on jobs”, tax on housing. Tell us the alternatives, please. The real challenge would be to take Treasury’s advice and, yes, lower the rate – but broaden the base. That would mean taxing more businesses on their payroll but at a minimal rate and leveling a tax on all homes on an annual rate but none on the transfer of homes. Easily said. But too difficult to sell. Impossible to sell.

At least be honest.

The role of journalists during the tax summit is to force the advocates of tax relief to answer the old question: where’s the money coming from for the services that nobody – just nobody – is volunteering to go without.

Bob Carr is the longest continuously serving Premier in New South Wales history.

 Source: Thoughtlines with Bob Carr