Absolute frustration. I write this as I watch yet another Q & A panel believe there are ways to close tax havens or to make companies and individuals pay their ‘fair share’ of income tax.
Someone suggests we have to understand the legal differences between avoidance and evasion.
Why don’t we derive revenues from the value of unearned incomes from our natural resources. Land and spectrum can’t flee the country, and it’s impossible to avoid revenues based upon their value.
Every study of revenue bases show land and resource-based revenues are the fairest and cannot be passed on in prices because they are in the nature of rents. This cannot be said about taxes on earned incomes.
The blindingly obvious remain invisible to apparently intelligent minds.
Tax expert Dr Terry Dwyer offers his analysis here.
…. BY SUPPORTING RENT SEEKING IN LAND AND OTHER NATURAL ASSETS
As we’re not extending the GST, and with state income taxes also out of the way, Australia could well consider implementing the Henry Tax Review’s well-considered recommendations to abolish 120 counterproductive taxes and make state land taxes all-inclusive. Carrying no deadweight, the Review demonstrated land tax to be the least distortional and most effective source of revenue.
If the Reserve Bank of Australia were designated to administer and set the rate for state land tax, it would take much of the politics out of essential tax reform, at the same time providing the RBA with a weapon to complement tweaking the cash rate. Clearly, interest rate policy doesn’t discriminate between productive and speculative behaviours, so the Bank is trying to meet its mission with one arm tied behind its back. The RBA might therefore be made effective instead of constantly being shown to have little to offer Australia’s currently floundering economy.
Tax land and spectrum ‘cos they can’t flee the country.
But that doesn’t cater for the sort of offshore tax evasion uncovered in the ‘Panama Papers’.
Maybe I owe Malcolm Turnbull an apology – and he’s not as ‘understandable’ as I had thought? Could state income taxes have simply been his attempt to show the right wing of his party he had ‘tried’ to promote their preferred tax reform?
As Michael Pascoe noted on The Drum yesterday, it was passing strange that if the PM was genuinely promoting income taxes for the states he hadn’t discussed it earlier with the premiers, instead of simply springing the idea upon them.
Could the following have been Malcolm’s real agenda? THE AGE this morning reports (page 4): “However, Turnbull was able to claim some wins after extracting a commitment from states to embark on genuine internal reform of their revenue raising and transparency measures. This would include beginning the reform process and the shift from inefficient taxes such as stamp duties, to more efficient ones such as land taxes.”
That would certainly be a move in the right direction!
Despite unsubstantiated claims to the contrary, LF Economics’ new study conclusively shows the Australian housing market is experiencing significant over-supply. Read the proof!
If you’re PM and running scared of the Sydney-Melbourne land price bubble coming to an end on your watch if the states were to do what they ought to do–use their land taxing powers properly–why wouldn’t you come up with this sort of nonsense?