Malcolm Turnbull's offer to allow the states to levy their own income tax must strike sheer terror into the hearts of state premiers. It has been very comfortable to be able to blame any shortfall in state funds on Canberra. The fact that the Commonwealth collects income tax and disburses it to the states by way of grants shields the states from responsibility from their main source of income.
The proposed new tax plan also delivers a huge benefit to the Federal Treasury. The two biggest problem outlays are Health and Education and obviously Canberra hopes to withdraw from both and make the states responsible for collecting their own finances. Many economists see Health and Education as the bottomless pits that will never be successfully financed unless crippling tax rates are imposed on taxpayers.
Turnbull claims that this measure will be tax neutral. The Federal government will reduce it's tax scales to the extent that the slack will be taken up by those imposed by each state - and that sounds like the thimble and pea trick - writ large ! If the taxpayers are not delivering more money the same problems that exist with Health and Education will be unchanged.
State income taxes were a part of the system before the second world war. To revert to the old system will see the creation of state bureaucracies to handle it's collection - and the end of a common rate of income tax across this entire nation. That opens up an interesting can of worms. Obviously, smaller states with low population numbers would be at a disadvantage. Poaching people and giving a tax incentive to move to a bigger state could hollow out the weaker states and simply add to the suburban sprawl of Sydney and Melbourne.
No matter how the politicians on each side of the political divide strut and caper with ways of carving up the economy, reality decrees that we need to put more money into the communal pot if we are to achieve a decent health, education and welfare system. The divisive point is that every individual wants that contribution to come from someone elses pocket.
The Australian public are a lot wiser than they are given credit for. We have seen governments from both sides of politics tipped out of office when their grasp of governing have not been up to scratch and when it comes to putting a mark on a voting paper the broad mass of the people seem very capable of evaluating the situation - and making a wise decision.
Despite the hysteria from vested interests and the sheer hypocrisy of partisan politics middle Australia seems ready to accept some form of additional taxation to fund both our health and education systems. The form that seemed to meet the right criteria was the plan to move the GST from ten to fifteen percent, but that quickly became untenable due to the strange balance of power in the Senate.
The wisdom of the Australian people was vindicated when John Howard won an election on the basis of introducing a new tax - and which saw the implementation of the GST. Just as pensioners and the lowly paid were compensated then, it would be expected that similar treatment would occur if the rate was changed now. Unfortunately, a golden opportunity seems to have been lost.
The voters will show their displeasure if the government continues to vacillate and continually change it's mind. Even unpopular decisions are given respect - if they are presented in an acceptable form !
No comments:
Post a Comment