My Lords and Gentlemen, a direct tax of 7% would be a dangerous experiment and one likely to incite revolt. But there is a method whereby you can tax the last rag from the back and the last bite from the mouth without causing a murmur against high taxes, and that is to tax a large number of articles of daily use so indirectly that the people will pay without knowing it. Their grumblings will then be of hard times, but they will not know that the hard times are caused by taxation. – British Prime Minister William Pitt (1759 – 1806)
The Goods and Services Tax (GST) is a tax on productivity. Economics should concern itself with the relationship between nature and society. With such a focus, it can be seen that taxes for the use of resources should be used to replace taxes on labour and capital–that is, on productivity–if we are to resurrect prosperity and greater community spirit.
Re-introduction of the federal land tax, or reform of state land taxes, would comply with the principle of taxing our resources and un-taxing product. It would also help to keep the lid on destructive land booms such as has been experienced in Australia ever since 1997.
Land taxes on economic rent*, that is, the community-created value of our natural resources, would permit Australia to reduce its taxes on employment and wealth creation, reputedly the federal government’s aim. The best federal land tax would be an ‘all in’ tax, with no thresholds or exemptions. The wealthy own more land, and also the most valuable land, while the poor own less land and the least valuable. Rich Australians, and international investors, would pay their fair share under a flat rate land tax – as land cannot be hidden nor flee the country. Impoverishing poorer Australians, who spend most of their net income, with a GST, is in the long run not even in the interests of Australia’s most wealthy.
I do not deny that all taxes – with the exception of those on economic rent* and inherited wealth – have some adverse employment and economic growth effects. – Australian Prime Minister John Howard, Australian Financial Review, 10 December 1991.