The " Lucky " Country !

Australia has survived for twenty-six years without a major recession, despite the reigns of government regularly changing hands between Labor and the Conservatives.  We live in a dangerous world.  We look to America for nuclear protection and that great country is walking away from the climate accord that seemed the last hope of saving the planet from global warming.  Britain - which many regard as our " Mother " country is in the process of leaving the EU and its trading future is uncertain.  Europe is struggling with waves of asylum seekers which are straining its stability.

World politics is adopting the defensive tone of erecting trade barriers.  The lessons that should have been learned from the great crash of 1929 are being ignored.  For many countries the hope of achieving a balanced budget is a distant dream.  The future prospects seem to be endless trade deficits.

Britain recently toyed with the idea of a budget measure that quickly became known as the " Dementia Tax :" - and which was thankfully quickly dropped.   It seems to be a measure of sheer desperation when the Treasury starts to delve into financial matters that may also be described as " Estate duty " - or more ominously - a " Death Tax " !

We had such a tax here in Australia at the end of the second world war - and people hated it.  Along with radio listener and television licenses it was despised and avoided by all possible means.  This British proposal sent a shudder through the entire population of the United Kingdom.

The plan was very simple.  When each person ended their tax paying years the government continued to pay the usual welfare payments and began to keep an individual record.  Every time you accessed the national health plan or received a fuel subsidy in winter the cost went on your ledger and that included the age pension.

It would be a bit like having a holiday at a very nice seaside resort.  When death occurred, the bill became due.  That took account of all your worldly possessions - money in the bank - shares - cars - boats - and even the family home.   The government recouped whatever you owed Treasury, with the benevolence that the next of kin were allowed to retain an equity of one hundred thousand English pounds.

The potential unfairness bestowed it with the " Dementia Tax " description.  Obviously, a wealthy person who died of a massive heart attack soon after retirement owed the government little and would will his or her fortune to relatives.  Someone who had the misfortune to develop Dementia might spent many years in an expensive nursing home - and be financially wiped out at death.  In an age of housing price bubbles the vast majority of people would fall victim to this tax.

It was also obvious that the rich would employ gifted lawyers and  accountants to plan their estates to avoid such a tax.   There are always loopholes that allow money to be secreted away in trust accounts and bursaries or moved offshore to be beyond  the reach of the tax man.   Such a tax would merely create a new tax dodge industry.

Unfortunately, tax ideas have a similar affinity to the common cold.  They are contagious.   We live in difficult economic times and governments are desperate for money.   Whatever they may call it,  the last thing Australia needs is a return of the " Death tax "  !