The Politics    Wednesday, July 15, 2015

Absolutely unhinged

By Sean Kelly

When it comes to tax, everyone’s gone mad

I know when I say “tax” some of you get bored, and some of you get scared, and therefore a fair chunk of you probably stop reading.

So I’ll get the message across straight away, so you don’t have to work through to the end: the tax debate in this country is totally unhinged.

I didn’t have to trawl through history to prove this. Just today, between the morning and now (it’s about 2 pm when I’m writing this, but I could have done it at 11 am), there were three examples. Here goes.

The first happened when the treasurer, Joe Hockey, pretended he was starting a conversation about tax – most specifically about the GST. He said that the money states spend needs to be matched by the money states raise – and given the GST is a tax for the states, we need more GST than we currently get.

It’s a news point, sure, as it always is when the man in charge of the nation’s cash raises the prospect of raising taxes. But because this is the conversation you have when you’re not having a conversation, Hockey immediately made it clear that this thing he wanted to happen theoretically would not happen in practice, because the government would only go ahead with it if all of the states and the Labor party agreed, which they won’t.

Which was already the government’s position. And, as I’ve pointed out before, this is the worst indictment possible of any government: that they delegate all of their authority for driving reform to the states and the Opposition. It’s pretty amazing when you stop for a moment to consider: the government will not announce its own policy until the Opposition has agreed to support it.

This is how cowardly our public debate has become.

(As a terrifying aside, I used to think the Coalition was using cuts to schools and hospital funding as a Trojan horse to argue for an increased GST. I am beginning to think it is the other way around: that the argument for a higher GST, which the government knows will fail, is a way of arguing “We wanted to fund schools and hospitals – but you wouldn’t let us! So we’re cutting their funding anyway. Good luck.”)

The second example to temporarily blind me with fury came when the treasurer tried, again, to mislead people about the rich paying so much more tax than they should. It might – might – be OK to hold that opinion, but only if it’s based on facts. This is what Hockey said: “Our personal income tax system is also highly progressive. For example, in 2012, the top 10% of individual taxpayers paid nearly half the personal income tax collected by the Government. That is an over-reliance and dependence on a narrow base to support our social infrastructure.”

He’s right that the top income earners in this country pay a significant proportion of the overall income tax in this country. That’s what a progressive taxation system is. That’s the way it is supposed to work. The rich pay more than the poor.

The only reasonable argument to be made here is a comparison to other nations – a comparison that Hockey didn’t even attempt. He probably didn’t attempt it because those comparisons demolish his argument.

To take the first two countries I checked on: in the US, the top 2.4% of individual taxpayers paid nearly half the personal income tax collected by the government. In the UK, the top 10% of individual taxpayers paid more than half the personal income tax collected by the government. In other words, they’re even more progressive than we are. (You can make arguments about other taxes in those countries, but then you have to do the same here, and that quickly leads you to the conclusion that Australia’s taxation system is even less progressive than it seems once you account for the GST and so forth.)

Disturbingly, this misrepresentation of the facts follows Hockey’s earlier, repeated claims about the rich paying half of their income in tax – which also turned out to be false.

Finally, there was a story this morning in the Daily Telegraph that Labor was about to announce a carbon tax (if you haven’t seen the front page, you are depriving yourself of one of life’s great pleasures). Very quickly the Liberals jumped up to say this was madness, that Labor’s carbon tax would be a disaster. Labor jumped up to say there was no carbon tax on the table, just an emissions trading scheme. And of course this dominated media coverage: was Labor going to bring back a carbon tax or not?

The incredibly sad thing about this is everyone’s talking about the same thing. They’re all talking about Labor’s policy (or what Labor is considering): it’s just that they insist on calling it different things. Meaning the debate isn’t about actual policy, what impact it will have, it’s about what name we give it. (Which is a pity, because there is some substance in that Telegraph story that deserves discussion.)

Ironically, this is exactly the semantic debate Julia Gillard sought to avoid, when she agreed you could call the damn thing whatever you wanted, in the hope this might actually mean the debate moved on to substance.

So we have a treasurer refusing to announce a policy until the opposition has agreed he can; the same treasurer refusing to use facts to buttress his argument because he knows the facts aren’t there; and our two major parties fighting not over an actual policy but over what name we’re going to give it.

All of this is a good reminder that neither side of politics has yet come up with a policy announcement significant or interesting enough to drag public debate to higher ground. Let’s hope that happens soon. I don’t think I can take much more of this tax stuff.

 

Today’s links

Sean Kelly

Sean Kelly is a columnist for The Sydney Morning Herald and The Age, and was an adviser to Labor prime ministers Julia Gillard and Kevin Rudd.

@mrseankelly

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