Meanwhile, in Bangkok  (Can’t help themselves!  I guess it’s easier to be a leeching parasite than to work?)|

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Housing Bubble Australia





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Saudi housing costs to halve with new land tax

Saudi Arabian real estate shares dive

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AFR 23 MARCH 2015

mark carnegieMark Carnegie says tax white paper a waste of time

by Katie Walsh

The federal government is less than a week from releasing its much-touted tax white paper but prominent investor Mark Carnegie says there’s no point: it should instead return to the Hawke-Keating era of decision-making and boldly implement the changes identified by reviews already.

Increasing the rate of the goods and services tax, plugging loopholes that help the rich to dodge tax and picking up ignored Henry tax review recommendations – chiefly land tax – are among the changes Mr Carnegie said were well-known reform musts.

“This is an issue of political will and execution,” the outspoken, high-profile Sydneysider told The Australian Financial Review.

“We’ve got collective action problems, not a paucity of ideas. Everybody agrees on what needs to get done.

“They’ve got to take their clothes off and put on each other’s clothes. We’re going to get stuck.”

For Mr Carnegie, what needs to be done was largely fleshed out in the Henry tax review, which is approaching its fifth anniversary in May. The clear exception was the GST, which the Henry panel was not allowed to consider.

Mr Carnegie said the consumption tax should rise to 15 per cent but only with a carefully devised compensation package to protect the poor.

Mr Carnegie’s venture capital company, M.H. Carnegie & Co, is funding the Australian Council of Social Service to do modelling work to figure out how the most vulnerable can be protected in any tax reform.

Land tax is the second big issue for Mr Carnegie, who nominates the mining tax – which struggled to life under the Labor government and was ceremoniously spiked by the Abbott government – as the most sensible idea that was “killed” by the mining lobby. Treasury estimates had collections over the next three years accumulating to $4.6 billion.

“Everything else is a distant third,” he said.

That’s not to say that they aren’t important.

“We really need a carbon tax – that debate has been asked and answered,” he said, expressing embarrassment that any move would now follow that of other nations, particularly the US and China, rather than lead them.

Negative gearing and trusts are among the areas that could be tapped to help claw back tax from the rich.

“Tax needs to fall disproportionately on the rich – everyone agrees on that now,” he said.

Carnegie, a mate of and co-investor with John Singleton, is a philanthropist and serial panellist on popular ABC political talk show Q&A who cuts a unique figure in the business world for his prioritisation of the needs of those who don’t share his riches.

Mr Carnegie stole headlines in 2011 at the Gillard-and-Swan-brokered tax forum, by declaring that the top 15 per cent of taxpayers should pay an additional 15 per cent in tax, through the abolition of loopholes.

Buying into the current debate over including the home in the pension means test, Mr Carnegie said it was a part of the net equity and assets that should fall within the formula.

On the Treasurer Joe Hockey’s talking point on allowing young people to tap into superannuation savings to buy a house, Mr Carnegie said the problem with the housing market had more to do with “barriers to supply as a result of ridiculous red-tape and shithouse infrastructure”.

“The big issue is you don’t want more than a 20-minute commute to work, which means you’ve got to have better rail and transport utilities.”

The Hawke-Keating government implemented a wide range of bold landmark reforms, including floating the Aussie dollar, introducing capital gains and fringe benefits taxes, breaking down tariffs and privatising state assets, including the Commonwealth Bank of Australia.

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On 3AW’s breakfast program this morning, in view of the ridiculously high residential real estate prices currently being achieved, of which they provided evidence, Ross Stevenson and John Burns asked one of the local property spivs when we may start using the ‘B’ word: B for bubble, that is.

“Oh, no, it’s not a bubble yet”, replied the spiv.

“Should we consider abolishing negative gearing, then?”

“No, definitely not” replied the spiv. (I could imagine Ross and John sharing a subversive wink in the studio!)

That’s the sort of self-interested commentary you get from many in the real estate industry whose fees are related to the prices they achieve for their clients.

Now, I’m not saying they shouldn’t get the best price for their clients, but they ought to be able to tell the truth about where we currently stand in the market — such as “Yes, we’ve been in an incredible bull residential real estate bubble since the late-1990s, because the tax system encourages property speculation above productivity.”

Or alternatively, “If we abolished negative gearing and applied an all-in land tax as the Henry Tax Review recommended, we could keep prices down for our children. Mind you, we’d have to charge a fee for our services instead of a commission on the selling price.”

Curiously, both major political parties have thrown their lot in with the real estate spivs because they know a great many Australians are into property speculation.  Neither party is prepared to provide leadership on the obvious fact that this 18 year-long bubble is absolutely unsustainable and has come at great cost to Australia’s productivity.

So, as both parties have been unrelenting in their support for the bubble, rather than encouraging its demise, the only question becomes on whose watch is it going to burst: who’s going to be left on on the musical chair to answer questions?

Pathetic.  And whichever party it is will then act so innocently: “We didn’t know! What could we have done?”

Our ‘representatives’ should be hung, drawn and quartered.

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These letters from THE AGE today surely suggest things can only improve from here?

AGE letters 21-3-15


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I’ve mentioned that the Progressive Era from the 1890s depression through to 1920 was underpinned by Georgist ideas, especially in the USA and Australia, although the British attempt to introduce a land tax in the People’s Budget of 1909 also fitted the progressive criterion.

I thank Paul Egan and Philip Soos for providing these two charts showing Australia’s revenue collection from the federal land tax.  Note how the land tax yielded to the interests of property speculators in the early to mid-1920s.*  We may thank Bob Menzies for abolishing the capture of federal land revenue from the mid-1950s.

(* Yes! Real estate speculation became rife in Australia in the 1920s.  It was matched and overtaken by sharemarket speculation in the latter part of the 1920s about which we always hear much more.  The 1920s real estate bubble was written out of this part of our economic history, just as surely as the 1973 real estate peak has been neglected in the demise of the Whitlam government in Australia.  It was only the Khemlani affair, the OPEC crisis, or reckless spending that played parts in Whitlam’s downfall.  The bursting of the property bubble which left many Australians financially distressed or destitute from 1974 apparently did not matter.)  [!]

Fed land tax

Fed land tax 2

And …… congrats, Oz! “Highest household debt in the world!”

I knew we could once again lead the world in something.  :(

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Q & A TOUCHED ON TAXATION TONIGHT  (It pointedly didn’t mention The Henry Tax Review, mind you.)

Treasurer Joe Hockey wants every nation to agree on common tax policies to stop international tax evasion – yet Australia can’t even come to agreement on its own tax arrangements. It’s a big, if not impossible, task to get countries to agree, Joe!

You give the nod to tax officers being embedded within big companies based in Australia, apparently without seeing Big Brother’s gross invasion of companies’ privacy with this measure. Yes, taxes must be paid, but with a taxman looking over your shoulder at every move?

You argue that companies must pay the tax where their income is earned, but surely international tax agreements to stop tax havens and tax officer embedding won’t do the trick?

However, you’re getting very close, Joe: “WHERE their income is earned.” Here in Australia, on the land or digital spectrum, international companies occupy! More particularly, on the annual value of their land and/or sites on the electro-magnetic spectrum.

Land and local spectrum can’t flee overseas to tax havens, Joe. You don’t need international tax agreements or the embedding of tax personnel in order to tax Australia’s own land and spectrum. It’s cheap; it’s efficient; it’s fair; and it works!


THE AGE 17 March:

Treasurer outclassed by John Daly of the Grattan Institute.

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