Kevin Rudd's " 20-20 Summit " is as assembly of a thousand Australians designed to think-up ideas to guide this country to a better future. The ideas range from the insane to well thought through plans that deserve intense scrutiny and further evaluation.
One suggestion will send a shudder down the spine of most Australians - the proposal to allow the states to impose a state income tax in addition to that imposed by Canberra.
Australians have long memories - and they well remember the previous government introducing a concept known as the " Goods and Services Tax ". This " GST " was negotiated with the states as the answer to state finances. The tax - levied at ten percent on the majority of goods and services - but excluding food - was to be collected by the Commonwealth and provided in it's entirety to the states based on a per capita formulae.
The states enthusiastically endorsed this proposal - and agreed to the trade-off imposed by the Commonwealth. The GST was designed to relieve regressive taxes already in place. The states agreed that - after a five year honeymoon period - they would repeal payroll tax and stamp duty - and several other minor taxes.
When the five year honeymoon period ended - the Labor controlled states reneged on this commitment. They cried poor - claiming that they could not afford to lose the revenue generated despite the flow of gold from the GST.
The former Federal government let them get away with it - and the present Federal government has made no move to bring them into line. As a result, all Australians are being taxed twice. They are paying the GST and they are paying either directly or indirectly for the taxes the GST was supposed to remove.
Any suggestion of a state income tax would involve similar trade-offs to the GST arrangements. Who in this country would now trust the states to honour any deal made with the Federal government ?
It is said that there is little difference between government and a drug addict. Once government gets a source of money they become addicted - and are incapable of doing without their " hit ".
Like the returning boomerang - their performance in reneging on solemn commitments made on the GST will hit the state governments behind the ear - and doom any suggestion of a state income tax to failure !
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