(03) 9020 2905Debt Man column – The West Australian (Money)
For: April 19, 2010.
Bruce Brammall
Debt Man
Like the Life Of Brian, the mocking chant to Caesar goes up: “Welease Henwy! Welease Henwy!”
Something smells funny. I reckon all election years smell funny. You get a whiff of just about everything.
The porky smell hanging around in election years is a given. And who doesn’t mind a bit of sizzling Babe in a barrel? To quote Homer Simpson: “Hmmm, pork chops!”
Election years can also smell sickeningly sweet, like toffee apples, when politicians kiss babies. Bleechh! You can bargain on a bit of a “wet dog” stench, as everyone boringly scrambles to claim underdog status. And, of course, election years wouldn’t be the same without the distinct smell of crud, of the bull’s variety.
While the election might not be held for six months or more, what I reckon I can smell now is the smell of procrastination, a bit like wine that’s turning off.
Where the hell is the Henry Tax Review?
The federal government took Henry into custody before Christmas. Some journalists were briefed on some important aspects of Henry in January. Selective leaking, it’s called. For example, one journalist described Henry as being really, really thick.
“Welease Henwy! Welease Henwy!”
It’s sounding like Henry might get released this week. Investors might not want him let out.
If the report were to find its way to the bottom of Sydney Harbour (where all good tax schemes used to go) or taken on a cruise from Fremantle where it accidentally fell into the Indian Ocean, it might not be such a bad thing.
If the leaks were accurate, it sort of sounds like Henry has targets – high-income earners, investors and superannuants – lined up to cop it in the neck.
Henry doesn’t like some of the long-standing tax benefits that are received by the wealthy when they contribute to super, that super pensions are tax free, or that capital gains can be taxed at half the rate of income.
He’s apparently not a fan of how properties are taxed currently. But by the sounds of it, the solution could be worse.
Henry doesn’t like the way stamp duty is charged upfront, that people’s homes are not taxed after that, but that investors do get lumped with land tax. The talk is that Henry will recommend ongoing tax on homes as a way of equalising property taxes.
Are we going to pay more tax as a result of Henry? Hey, this is an election year and proposing an increase in taxes would be pretty brave.
For those who think tax is something that should be kept to a minimum – and we’re a dying breed, according to the statistics – what we didn’t need was for someone to give the green light to raise taxes.
But that’s exactly what a report from independent tax group TaxWatch gave us last week. TaxWatch said Australia, by and large, is well below average.
Sssshhh! Don’t say that! Don’t even think that!
TaxWatch has compared Australia to its economic competitors, the 30 nations that make up the OECD, and declared that Australia’s government ranks admirably in how low its annual tax take is.
According to TaxWatch’s report, Australia’s total tax revenue is in the bottom 10 of those 30, and neither income tax nor company tax rates are high.
High income earners are better off than in most other countries and have seen their tax rates decrease over the last two decades. However, lower income earners have seen little in the way of cuts to their tax rates over that period.
When it comes to capital gains taxes, TaxWatch says it’s about even. Some of our taxes are high, while others are low, while the rate of our GST is below average.
Taxes and the services provided by government are a direct trade-off. And, according to TaxWatch, Australians want the Lucky Country to spend more on services. Over the last decade, support for higher social spending has increased from 25 per cent to 47 per cent, while those preferring tax cuts has fallen from 47 per cent to 34 per cent.
Bad TaxWatch! Naughty TaxWatch! You’ve given them the ammunition to raise taxes.
My last minute plea to Caesar? Don’t welease Henwy! Cwucify him! Cwicify him!
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au .