Mega Thread All things Tony Abbott

[Eagle87]

You have zero idea about the tax system.
Stop writing nonsense.
If the price of everything is going up it offsets any gains made in income.
If you read Ken Henry's tax review it explains very thoroughly how the tax system can and should be made fairer.
Taxing the 'middle' more is a completely stupid idea.

Well my expertise for 20+ years has been Australian and International Tax. I worked in making submissions to Henry for the 2 largest professional Accounting bodies in Australia. You?

I'm well aware of the recommendations of Henry all of which were ignored by the Labor party except for an out of context poorly drafted Mining tax aspects of which were based on moronic assumptions by Henry and his treasury bods. You can read my comments on the Mining tax in the thread on this board. There's a lot in there.

You need to define "the middle" but if your proposing that we raise no taxes on anyone but "the rich" and we abolish no transfer payments except for "the rich" we've got a problem.

And your inability to grasp my points about rising costs and the relationship to disposable income caused, in part, by effectively removing large slabs of taxpayers from the tax system suggests you aren't that bright.

I'm happy to have a discussion on these issues but your response is anemic and says nothing.

Have a proper go

 

[Number37]

Well my expertise for 20+ years has been Australian and International Tax. I worked in making submissions to Henry for the 2 largest professional Accounting bodies in Australia. You?

LOLZ.
Ken Henry would have had a good laugh with your submission.

Henry Tax Review Recommendation 1:
With both specific taxes and user charges, revenue would be a by-product of the tax or charge, not the reason for it.

Additional specific taxes should exist only where they improve social outcomes or market efficiency through better price signals. Such taxes would only be used where they are a better means to achieve the desired outcome than other policy instruments. The rate of tax would be set in accordance with the marginal spillover cost of the activity.

Tell us, in your professional opinion, what exactly you would be taxing the 'middle' for?

Ken Henry said:

Other existing taxes should have no place in the future tax system and over time should be abolished.

On what you have written, it is pretty obvious you have no clue about the tax system.

 

[Eagle87]

LOLZ.
Ken Henry would have had a good laugh with your submission.






Tell us, in your professional opinion, what exactly you would be taxing the 'middle' for?

Ken Henry said:


On what you have written, it is pretty obvious you have no clue about the tax system.

Umm what?

What do you think Henry was arguing for?

His suggestion was a tax free threshold of $25k then a 35% rate to $180k and then a 45% rate above that. He also suggested removing many transfer payments. He acknowledged that the 45% rate at $180k was high relative to OECD averages. He agreed there is a disincentive risk to setting the rate too high.

The effect of those Henry rates would be people from about 40k to about 90k paying more tax than they currently do. Combine that with his recommendations to slash transfer payments and well you see where this is going.... It's fairer though... just not from the perspective of some in the middle.

By the way, those on more than 180k would have paid (ever so slightly) less tax than they do under the existing system.

Of course Henry further had to be viewed having regard to all his recommendations. Changes in the tax on super, savings, Capital gains etc etc....

Where I have no clue is what exactly you are arguing for. You seem to want to Tax the rich. And site random contextless excerpts from Henry that neither refute what I've said out enhance any position you may be taking. That position being currently unfathomable....

I think you're out of your depth but I'm happy to continue if you can please try and move to an acceptable standard of logic.

Oh, in case it wasn't overt enough for you, I have not suggested new taxes, I'm suggesting that the current mix of tax and transfer payments doesn't work. Because it had the net effect of leaving most of the middle - average earning families - as making no net contribution to the tax system. This is a problem caused by the largesse of a boom and a lazy Howard. That needs to be rectified.

And it's tough because that Middle is now used to and geared for an effectively net zero income tax position. Anything that changes that hurts them; but only takes them back to the position they once were in as regards taxes (i.e pre Howard getting too generous)

Focusing on taxing "the rich" misses the point that you need a clearer system sure but also one in which most make a reasonable contribution. We don't have that at present. Henry on his income tax numbers agrees....

And yes, I'm sure Henry laughed at the contributions of the ICAA and CPA Australia ....

 

[Number37]

Umm what?

What do you think Henry was arguing for?.

You suggested that the tax system be used as some sort of policy instrument.
Tax the middle more, you cry. Your only discernible reason is that they currently are tax neutral. A statistic you got from one of Joe Hockey's sound bites, yeah? A statistic used by morons like Donut Joe to create the perception that the rich are doing their bit and it's the bludgers in the middle and on low incomes that are not doing their bit.

To fix that grave injustice, you say 'tax the middle more', how would you suggest the government do this? Raise the marginal tax rates at the middle income level? Lower the thresholds for rebates? Something else? ( I simply pointed out that Mr Henry suggests NOT using the tax system as a policy instrument, unless it is a last resort. Why would he make such a recommendation? If you had any understanding of the tax system you would understand why!)

In short, your suggestion is just plain stupid and if you really have had 20 years experience in tax then the reasons would be obvious.

 

[pokerspiv]

Well my expertise for 20+ years has been Australian and International Tax. I worked in making submissions to Henry for the 2 largest professional Accounting bodies in Australia. You?

He's a highly opinionated layman on a football forum.

 

[Power Raid]

You might need to be more specific. I'd like to see the concrete numbers.

the last quoted number I heard was $15.4b. Not sure if that was the age or another outlet.

but the apply the multiplier effect on that.

 

[Eagle87]

You suggested that the tax system be used as some sort of policy instrument.
Tax the middle more, you cry. Your only discernible reason is that they currently are tax neutral. A statistic you got from one of Joe Hockey's sound bites, yeah? A statistic used by morons like Donut Joe to create the perception that the rich are doing their bit and it's the bludgers in the middle and on low incomes that are not doing their bit.

To fix that grave injustice, you say 'tax the middle more', how would you suggest the government do this? Raise the marginal tax rates at the middle income level? Lower the thresholds for rebates? Something else? ( I simply pointed out that Mr Henry suggests NOT using the tax system as a policy instrument, unless it is a last resort. Why would he make such a recommendation? If you had any understanding of the tax system you would understand why!)

In short, your suggestion is just plain stupid and if you really have had 20 years experience in tax then the reasons would be obvious.

Wow. Tax policy IS a policy instrument and every government has one.

Henry's review was the result of a view that tax policy needed to change so that inefficiencies in the system that are counter productive be eliminated as much as possible and that going forward future policy decisions had some sort of tax philosophy driving them rather than short termism. That said, any progressive tax system is driven by some form of policy. The progressive rates are arbitrary and set in line with that policy.

Here is a quote from Peter Costello in an interview with Kerry O'Brien in 2007:

"....and the point that I'm making is that they haven't been because those tax cuts have been fully funded, and after they've been done the Government has still been in surplus. So, they wouldn't have been better off if taxes hadn't been cut. Cutting taxes has actually been a way of delivering benefits to families, particularly low-income families and bear this in mind - now, under the changes of this government, something like 60 per cent of Australian families are paying no net tax. That is, their family tax benefits are outweighing their tax liabilities and that's something that's actually really helped Australian "

http://www.abc.net.au/7.30/content/2007/s2000192.htm

The key aspects of this were that the cuts were funded and we were in surplus. We threw money around because we could. We now have falling revenue and rising costs. So the largesse needs to be unwound.

Now throwing that money around did increase disposable income which did fuel increases in wealth caused by rapidly increasing house prices. And people have gotten used to no net tax after almost a decade of it. But it's unsustainable.

Henry recommended simplifying the entire system by simplifying the marginal rates and removing much of transfer payments. But his changes need to be viewed in totality and that's a huge task given their breadth.

I agree that he believed much of the complexity has arisen as a result of short term policy decisions but that includes the ones made by Howard & Costello that are a part of the problem now I.e the 60% making no net contribution.

What this government have done is made accessing some of the transfer payments harder, over time by fixing hard thresholds and by lowering thresholds or, in some cases applying thresholds for the first time. Most of this has little effect until 2015/16 and beyond. And they've still got caned for attacking people's living standards etc etc .. Imagine if they reversed the tax cuts of prior years or adopted Henry's rates and took $15 -$20 a week off people on $60k.

The problem as I see it is we can't actually have that % of households not paying any net tax in a system so dependent on income tax (almost 40% of revenues). So we either drag people back into being net payers or we find alternate substantive revenue streams (like a higher rate GST). Both cost the bottom and the middle.

Or we could just slash and burn spending which leads to mass reductions in transfer payments - which has the same effect.

I'm happy that we take Henry's advice and choose a tax system that's as efficient as it can be and avoids counter productive aspects but it still has to raise sufficient revenue ...

 

[Power Raid]

I am not sure that your response addresses what I asked.
Leg of lamb never reached $100 and Whyalla hasn't been wiped off the map. No-one I know believes that the first power/gas accounts have shown anything like a $50-100 reduction (given that savings was going to be $550 per year).

Who has benefited? If not the consumer, not the environment, supermarkets stated that they didn't pass on costs as they absorbed the tax.

Surely this was not a con, if it was well then the gov't has missed out on $6 Billion in revenue, which would be very helpful right now.

The government's mismanagement has seen our nation burdened with a generation of debt, a tax system that doesn't collect enough revenue and businesses leaving Australia due to red tape, green tape, two dangerous taxes that added to the weight of doing business in Australia and worse created business uncertainty.

So the cost of these taxes was more than a direct cost on business and the on-cost to all Australians. It had an impact on employment and poorly targeted investment in our energy sectors leading to higher electricity prices. Again this higher cost of business, has contributed to businesses leaving Australia and higher unemployment. This is attested by the energy hungry manufacturing industries leaving Adelaide which not surprisingly has the highest cost electricity and has been the leader in poorly targeted investment in its energy sector.

So what is the benefit? We have remedied the tax but we now have to set a clear positive long term strategy leading to a cleaner future. Once this has been achieved, and businesses regain confidence, businesses will return and thus we will see the fruits of the repeal. We have achieved stage on but stage 2 will likely take 5 years.

We no doubt will recover but the hole we are in is deep but more has to be done to stop the rot.

 

[Number37]

Henry recommended simplifying the entire system by simplifying the marginal rates and removing much of transfer payments. But his changes need to be viewed in totality and that's a huge task given their breadth.


I'm happy that we take Henry's advice and choose a tax system that's as efficient as it can be and avoids counter productive aspects but it still has to raise sufficient revenue ...

You have no idea!
The whole idea behind Henry's simpler tax system is that the government stops taking with the left hand giving back with the right.
Start by increasing the tax free threshold.
Stop classifying government payments (social security) as assessable income.
Build levies (medicare etc) into the marginal rates.
All of that does not change anything other than making it simpler for users and the govt. It has no impact of consequence on revenue.
To a large extent the 'middle' will be unaffected. i.e. they will still be tax neutral.
The rest of his recommendations are aimed squarely at tax minimisation and tax avoidance. Who do you think that affects? Hint; It's not the middle.

As for your contention of a wealth boom. Dream on!
Have you looked at the level of private debt for the average Australian?
The only people getting wealthier are the already wealthy. The rest are just treading water.

He's a highly opinionated layman on a football forum.

Not opinion, fact.
Note my emphasis on what Ken Henry actually said.

 

[romeoh]

the last quoted number I heard was $15.4b. Not sure if that was the age or another outlet.

but the apply the multiplier effect on that.

What did each individual household in Australia 'save'?

 

[Gough]

That carbon pricing worked is the big elephant in the room for some, emissions decreased, the economy continued to grow, and as has been pointed out, $6 billion would sure as hell help the bottom line.

 

[Power Raid]

That carbon pricing worked is the big elephant in the room for some, emissions decreased, the economy continued to grow, and as has been pointed out, $6 billion would sure as hell help the bottom line.

no; to succeed it would take years to see the benefit as infrastructure simply doesn't change overnight. so what caused the decrease in CO2

1) continued improvement in products such as lower energy producing tvs, lights, a/c and commercial products. We do not manufacture these products nor are they made for our market. So all though this is fabulous it has very little to do with australia's carbon tax.
2) energy intensive industries like manufacturing are closing down in australia due to high energy costs, red ape and business uncertainty (meaning we have just exported our polluting industries to higher polluting jurisdictions for a net negative for the globe).
3) We have also seen a down turn in logistics, mining and refining industries. This again has been seen globally evidenced by the oil price.

So what has the carbon tax done? picking on SA - it has ripped the guts out of SA's manufacturing industry and put Olympic Dam on the back burner for 25 years. So not only do we see 20yos graduating with a generation of debt but they are graduating into a economy with higher unemployment, lower wages for those that find work and the type of work available for most is just dead end stuff. All of that, just to export our pollution for a net gain in global CO2.

 

[Power Raid]

What did each individual household in Australia 'save'?

Real costs will decrease in time as market forces work their magic but the real benefit is we can start work on fixing the economy and getting on with a cleaner future without negative policy and increased business uncertainty.

So you can save your pennies and improve of commercial and private activities to improve the environment.

 

[GuruJane]

So what has the carbon tax done? picking on SA - it has ripped the guts out of SA's manufacturing industry and put Olympic Dam on the back burner for 25 years. So not only do we see 20yos graduating with a generation of debt but they are graduating into a economy with higher unemployment, lower wages for those that find work and the type of work available for most is just dead end stuff. All of that, just to export our pollution for a net gain in global CO2.

Yes and will help Victoria along to its rust bucket destiny.

 

[Maggie5]

Yes and will help Victoria along to its rust bucket destiny.

Can you remind me which post and thread that quote from me was from?

 

[Eagle87]

You have no idea!
The whole idea behind Henry's simpler tax system is that the government stops taking with the left hand giving back with the right.
Start by increasing the tax free threshold.
Stop classifying government payments (social security) as assessable income.
Build levies (medicare etc) into the marginal rates.
All of that does not change anything other than making it simpler for users and the govt. It has no impact of consequence on revenue.
To a large extent the 'middle' will be unaffected. i.e. they will still be tax neutral.
The rest of his recommendations are aimed squarely at tax minimisation and tax avoidance. Who do you think that affects? Hint; It's not the middle.

As for your contention of a wealth boom. Dream on!
Have you looked at the level of private debt for the average Australian?
The only people getting wealthier are the already wealthy. The rest are just treading water.


Not opinion, fact.
Note my emphasis on what Ken Henry actually said.

At this point I have to assume you're just deliberately arguing with no actual point other than hearing your own voice.

You are selecting random quotes from me and asserting random quotes from the most comprehensive tax review ever undertaken and you are then fitting them around your preconceived ideas about both me and about Henry.

1
On Wealth I'll quote the following:

http://m.smh.com.au/business/the-ec...chest-says-credit-suisse-20141014-1163ip.html

That's from October.

2
On Personal income tax, I refer you to the Costello quote from 2007. 60% of households make no. contribution.


3
On the impact of Henry Tax Review proposals for personal income taxes I provide the following:



Google is your friend on this. Search for " average family worse off under Henry" or similar.

Again, this isn't a bad thing because we need to broaden the base. And we are reliant on income taxes. And 60% of households pay no net tax.

Our choices are do nothing. Which was an option in 2007 but now requires excessive debt funding. Or do something. Which requires us to reduce transfer payments/increase tax take across the board/or cut services. Probably all 3. (Raising taxes to be meaningful can't just focus on the rich but had to focus across the board. So you raise taxes via income, via GST or via Property taxes (Henry proposed a much broader land tax on ALL Property owners for example - http://www.smh.com.au/business/fede...or-all-knocked-on-the-head-20100502-u1m9.html)


This isn't exactly radical thinking. But it's tough politically. As Henry acknowledged and as the Labor party acknowledged by ignoring 90% of his recommendations.

For you to assert that Henry merely proposed simplifying income tax and transfer payments to no real effect and then attacking tax minimization and tax avoidance is to be disingenuous or downright idiotic. It's one of the two. He went way beyond that and many of his suggestions were very good ideas BUT they require an open, logical reasoned discussion and unfortunately the world is full of folk who think like you .... Us and them, narrow minded and full of pre-judgement

 

[GuruJane]

Quoted Power Raid at #667. Must be a glitch in system.

 

[Footy Smarts]

no; to succeed it would take years to see the benefit as infrastructure simply doesn't change overnight. so what caused the decrease in CO2

Sorry PR but this is just not true. People can decide to put solar panels on their roof and in the space of a week have them generating power. Same with most energy saving devices like LED lighting.

The major changes around the time the carbon tax was implemented was growing solar installations, big uptake of energy efficient products and mothballing of coal-fired power plants. None of these take much time at all and it's exactly why we saw a down-swing in emissions from the time the carbon tax was announced through to when it was removed. It worked in giving a price signal (actually the scare campaign was the biggest impact meaning people thought it would be far more costly than it was ever going to be) and everyone, be it households, business or government, changed their energy behaviour accordingly.

1) continued improvement in products such as lower energy producing tvs, lights, a/c and commercial products. We do not manufacture these products nor are they made for our market. So all though this is fabulous it has very little to do with australia's carbon tax.
2) energy intensive industries like manufacturing are closing down in australia due to high energy costs, red ape and business uncertainty (meaning we have just exported our polluting industries to higher polluting jurisdictions for a net negative for the globe).
3) We have also seen a down turn in logistics, mining and refining industries. This again has been seen globally evidenced by the oil price.

Actually our energy intensive industries such as aluminium smelting are among the most highly polluting in the world because our energy production is among the dirtiest. Claiming that these went to even more heavily polluting places is laughable. Of course the fact that trade exposed industries were given excessive compensation and assistance in adapting meant many of them (ridiculously) actually came out on top with the carbon price in place. The fact that the $A spiked at the same time was what pushed export companies to the wall but it's politically expedient to blame something that had a fraction of the impact when you want to oppose it.

So what has the carbon tax done? picking on SA - it has ripped the guts out of SA's manufacturing industry and put Olympic Dam on the back burner for 25 years. So not only do we see 20yos graduating with a generation of debt but they are graduating into a economy with higher unemployment, lower wages for those that find work and the type of work available for most is just dead end stuff. All of that, just to export our pollution for a net gain in global CO2.

Actually apart from Tasmania, SA was the state that gained the most from carbon pricing. Electricity prices in SA in the early 2000s used to be miles above the rest of the country. Since they've gone towards wind power electricity prices have dropped significantly compared to other states (note the spike for Adelaide from 2002-2005 when they were ~30% more expensive than the other capitals):

Yet now prices in SA are similar to everywhere else. Looking at Red Energy in you pay 10c/KWh more in Adelaide than Melbourne but the service charge is ~30c per day cheaper. Depending on the amount of electricity being used by the household it might be more or less expensive but at most it'll be a few % difference either way. Not the ~30% difference it was a decade ago.

So you're wrong when you say it's ripped the guts out of the SA economy. Compared to other states SA would be better off under a carbon price. You're also wrong to suggest our energy intensive industries will go to dirtier places when a) they're protected from the impacts and b) if they do move (likely for unrelated reasons like the previously high $A) they'll likely go to cleaner countries with Germany's much cleaner aluminium production exploding while ours dropped.

At some point you've just got to admit the carbon price worked. There was a drastic reduction in emissions for those areas covered and the economy was still growing. The fact that the only criticism you here is massive hyperbole ("ripped the guts out of the economy", "job-destroying", etc) rather than reasoned analysis shows what a joke most of the criticism is. It was imperfect as all policies of this size are but overall it was achieving its aim and having negligible negative impacts. That's exactly what good policy should do.

 

[Gough]

While hosting the cricket teams at a function yesterday, the PM said he couldn't bat, bowl or field but was a great sledger. Yet another case of cricket acting as a marvelous metaphor for life.

 

[Patrick Bullet]

This isn't exactly radical thinking. But it's tough politically. As Henry acknowledged and as the Labor party acknowledged by ignoring 90% of his recommendations.

Thanks for the info on the Henry review. I've enjoyed reading your posts on it. You seem to know a lot about it, so I'm interested in your opinion about the new tax review the government is planning. Given that Labor followed basically bugger all of the Henry recommendations, do you think this new review is likely to provide any new insights? Any predictions about what might be different?

As for me - someone who knows little about tax - I am just hoping the report that comes out isn't just another piece of ideological crap, which seems to be the norm for this government!

 

[Eagle87]

Thanks for the info on the Henry review. I've enjoyed reading your posts on it. You seem to know a lot about it, so I'm interested in your opinion about the new tax review the government is planning. Given that Labor followed basically bugger all of the Henry recommendations, do you think this new review is likely to provide any new insights? Any predictions about what might be different?

As for me - someone who knows little about tax - I am just hoping the report that comes out isn't just another piece of ideological crap, which seems to be the norm for this government!

There is that risk.

Henry was prohibited from making any adjustments to GST as part of his review. The new review isn't. That will likely alter the focus of a significant part of the "broaden the base" aspect of the review. It is political suicide though. So...

The problem we have is we do have an inefficient mish mash of regressive and counter productive taxes. We need reform. But every change, in isolation, will impact someone negatively. The media will seek that someone out and run with that. In addition if those people are represented by a lobby be it unions or small business our whoever there will be a campaign. So we'll get Limited reform focused on someone the government of the day thinks is a soft political target "big Mining" "the rich" "dole bludgers"...

It seems to be we need the 2 big parties to support substantial change. That seems unlikely unless we have a real crisis. So we do a review and not much changes until we have 12% unemployment, houses prices in freefall and the dollar at 60 cents USD ....

Too cynical?

I'd add, a great and widely respected leader who was a brilliant communicator could possibly get this stuff through. Our options seem to be Abbott or Shorten... So yeah nah

 

[ralphmalph]

Note that documents such as the Henry review have long lives. While it was limited with respect to GST, it was otherwise comprehensive. Previous reports/reviews of similar scope have had their recommendations taken up years later by subsequent governments generally with better leaders than the current two options, as E87 said.

IMO, assuming no one will do anything comprehensive, the obvious short term easy target is superannuation. The limited tax proposed by the previous govt would have been a start.

 

[TheMase]

I would also like to know how mining for Uranium, copper, gold and silver at Olympic dam was affected by the carbon tax (and pretty sure unaffected by mining tax too)....

 

[Maggie5]

Quoted Power Raid at #667. Must be a glitch in system.

Was surprised as didn't read like my post, strange glitch?

 

[Happy Mastenator]

Note that documents such as the Henry review have long lives. While it was limited with respect to GST, it was otherwise comprehensive. Previous reports/reviews of similar scope have had their recommendations taken up years later by subsequent governments generally with better leaders than the current two options, as E87 said.

IMO, assuming no one will do anything comprehensive, the obvious short term easy target is superannuation. The limited tax proposed by the previous govt would have been a start.

Lets just see a government role back negative gearing. I'm yet to hear one valid argument why this is still in place, yet it costs the government in the vicinity of 3-4 billion a year, while driving up housing costs for now owners.