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A Personal View |
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Reform
Introduction
Bruce Barbour - February 2020 and later updates.
This section is a thought experiment: What would I do differently if I ruled Australia? How would I make Australia a better, fairer place? Not that I want to rule Australia - to do that I would need to be a politician and I can think of nothing worse (well there are a few things worse!).
I like to explore ideas and propose solutions to perceived problems. And I see many areas in tax and other policy that could be done so much better. In this section I set myself the task of redesigning many systems - what's wrong and then how to address that.
I hope that I have come up with a series of reforms that would be beneficial to Australia going forward. The reforms suggested are to the taxation other financial and the other societal reforms to the political and economic systems of Australia. Are they likely to be implemented? Who knows but at least the ideas are out there. Things can be done better if some of the ideological and other shackles are cast aside.
In most cases I provide just the kernel of the idea. While I could flesh them out, that would take many pages on each idea. This site is not the place for that. The rates and figures suggested are nominal, not based on economic analysis of the full impact of the proposal. If they were seriously being considered for implementation full economic analysis would need to be done which may change some of the figures and other details.
Taxation
Taxation reform has always been problematic in Australia. The reason
for this is quite straight forward: the word "tax" is poisonous to
the general disinterested populous, except if it has the word
"lower" or "abolish" associated with it. The general opinion seems
to be - if it is a tax it must be bad. And it does not matter
whether the person him or her self or most of the people they know
will not be affected by the tax. In their mind - is tax = is bad. Because of this it is so easy for either side of politics to "weaponise" the arguments against any proposal to increase taxes or to introduce a new tax or to do significant tax reform that involves the introduction of new taxes. It also seems that it does not matter to the politicians whether the proposal is good, in the nation's best interest or even whether they secretly agree with the tax proposal. They are most likely to take the political approach, and use it as a cheap shot weapon against their opponents.
From my observation the only way tax reform can be achieved is that any new tax introduced must be offset by other tax decreases or abolition probably worth two or three times as much as the new tax collects. Consequently opportunities only arise for tax reform after government tax receipts have increased substantially due to either a sustained period of "bracket creep", increased income from resources based taxes or from company tax in boom periods. These opportunities must not be wasted as they have been in the past, where governments have either decreased tax rates without reform or spent the windfall on services and projects, worthwhile or otherwise.
Why is tax and other financial reform necessary? If we stop giving tax subsidies and pensions to those that don't need them then the extra income derived will provide the opportunity to improve services and government social security payments (especially the unemployment benefit which is well below the poverty line) in Australia. And after this is achieved the savings can be used to lessen other taxes such as the abolition of payroll tax by State governments (which was meant to go with the introduction of the GST).
It should be recognised that introducing a new tax, or plugging a hole rorted by tax minimisation schemes, does not necessarily mean a greater overall take overall (except as indicated in the prior paragraph). Government needs a certain amount of money to run government and to provide infrastructure and services. That money largely comes from taxes but the parts of the economy taxed to derive that income can vary as decided by Government. Given that Government does need this money then it might as well use its powers of setting and collecting taxes to encourage beneficial behaviour and discourage damaging behaviour, as well as just collect money. The carbon tax was (and will be in the future) a prime example of this. When used in this way the community gets a dual benefit from the tax system rather than single purpose taxes (such as income tax) which are just to collect money to run Government. For example, the millions collected from a proposed packaging tax may encourage a decrease in the amount of packaging used and as well go to lower other taxes, not to necessarily just to increase the total Government tax take.
Economic rationalists hate the use of taxes in this manner, arguing that they distort the free market. And yes they do - that is the whole point. The free market is not the king, the people are the king.
It is with the knowledge of the difficulties of tax reform, but also the benefits, that I will suggest a number of tax and associated reforms for consideration on the pages associated with this section.
Financial Reform
Related to taxation reform is a group of financial reforms to systems that offer benefits and concessions to Australia. These benefits and concessions are offered to try to achieve a desired outcome for the Australian people. And I have no qualms with that aim however they must be fair and in line with Australia's progressive tax system and not needlessly give benefits to those that do not need them.Societal Reform
Suggestions for general voting reforms and also reform of the Senate to make it more democratically representative and to work better as a house of review. Also a "message from the future" containing a suggestion on how society may work in 2050 in the face of climate change and other challenges.The topics I cover are listed in the side bar. Or else click on the Next Page link below to step through each topic in turn.
Next Page - Death Taxes
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