Abusing the balance of power

It it not necessary to be a fan of the Rudd administration or the alcopops tax to deplore the horse-trading that is going on to hold the Government to ransom on legislation to ratify the tax. Abuse of the Senate is not a novely and the man from Tasmania was probably the worst example of abusing the balance of power.

It is a sad situation with so many issues that deserve attention to have this piece of business held up for the sake of Nanny State legislation on advertising and spending on alcohol help lines which already exist, at least in New South Wales.

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19 Responses to Abusing the balance of power

  1. Richard Green says:

    I assume you mean the man from Victoria. The Tasmanian crossbenchers passed it with amendments.

  2. Patrick says:

    I believe Rafe is referring to the former Senator Harridine.

    I don’t really have a problem with this. No Senator from any State is less elected than another. I don’t care what NSW does or has and I struggle to imagine the relevance to the Commonwealth parliament, as well.

    If anything, I suspect that this actually moderates the dichotomous pressures of two party politics and leads, more often than not, to more ‘centrist’ politics.

    Finally, Rafe, if you meant anything at all, you would have meant to insult the Government of the day, not any individual Senator. What are they doing, ‘with so many issues that deserve attention’, mucking around with Nanny State taxes of negligible proven or even supposable effect???

  3. spog says:

    The abuse of power was the levying of the tax with no legislative authority in the first place. Taxation without proper Parliamentary approval, as in this case, is just plain theft.

    For me, alcopops is one to add to my “votechanger” list, not because of the idea itself, but for what it reveals about the contempt these (struggles to find appropriately polite yet derogatory word) have for proper process.

  4. Jacques Chester says:

    The abuse of power was the levying of the tax with no legislative authority in the first place. Taxation without proper Parliamentary approval, as in this case, is just plain theft.

    I agree, this is the main issue, especially since one of the key arguments has been “you must pass it, otherwise we must give back $300 million!”

    That’s an argument for passing any such tax in future. I’d like people to think about that. It’s a very dangerous precedent to set.

  5. I presume this is pretty standard fare – ie that the Rudd Government is not the trend setter here. But I’m happy to be corrected on it.

  6. Rafe Champion says:

    If the bill was being held up on some matter of high principle, like its fundamental legitimacy, that would be a different matter. However the people who stood in the way were perfectly happy with the bill, they just wanted to spend some more of other people’s money.

  7. Richard Green says:

    Ah, apologies, I misread the past tense as present tense.

    On the note of tax, when there is discussion of how to spend money from taxes like this I always have to pause for a bit. I’m too busy thinking about the affect of the price signals from sin taxes on grog, tobacco and (perhaps in the future) carbon, or congestion charges, that I never think about the fact there is actually tax revenue.

    I guess its reasonable for most people to see taxation only as receive funds to spend, but I guess my training made me see the effects of taxation first. Where the revenue is spent becomes an afterthought.

  8. Tel_ says:

    The main properties I desire in a government are stability, lack of meddling in my life, and great slowness in making changes to legislation. Senators who vote NO suit me just fine. Parties who show willingness to sell out on issues tend to pay the price (as the Democrats discovered).

  9. Tel_ says:

    Where the revenue is spent becomes an afterthought.

    In NSW you would be lucky if there’s anything left after the Pope gets his share. With 7 days rental on a steel fence for APEC cost 2 million, and with Catholic Youth Day coming in tens of millions over budget, and the state nearly hitting bankruptcy shortly afterwards… the revenue goes to pretty much the same place the alcopop goes, and that’s just between me and the wall.

  10. MikeM says:

    It has been long-standing practice by governments of both persuasions to implement excise changes from the day they are announced and obtain legislative backing in due course.

    What seems to have been lost in the uproar is that this legislation simply addresses one of the many crazy anomalies in excise rates on alcohol. Without going into detail on the whole thing, full strength packaged beer is taxed at $40.82 for each litre of alcohol in excess of 1.15% that it contains. (Low strength beer carries less tax and so does draught beer.) Spirits are taxed on entire alcohol content at $69.16 per litre of alcohol that they contain (apart from brandy, which is taxed only $40.82).

    So if you buy a 700mL bottle of bacardi containing 40% alcohol, government takes $19.35 of the price in excise. Retailer, distributor and distiller get whatever is left over.

    Before the proposed excise change, alcopops were taxed at a concessional rate. I can’t remember what it was but it might have been the same as packaged beer. So you were paying quite a lot less tax for the bacardi contained in a bottle of bacardi and coke than if you bought the bacardi and coke separately and mixed the drink yourself.

    You don’t need to be King Solomon to see that there is justice in abolishing the alcopop concession and taxing bacardi at the same rate regardless of how it’s sold. This is exactly what the government’s legislation intended to do.

    If Her Majesty’s loyal Opposition thinks that the excise on alcopops should be left where it previously was and the whole thing’s just a revenue-raising rort, why is it not arguing that current excise on bottled bacardi is just a revenue-raising rort, and should be reduced from where it is, to the same as that on alcopop bacardi?

    Alcopop suppliers have already taken evasive action. “Beer” is defined as:

    … a brewed beverage which

    (a) is the product of the yeast fermentation of an aqueous extract of malted or unmalted cereals, whether or not containing other sources of carbohydrates;
    (b) contains hops, or extracts thereof, or other bitters;
    (c) has not had added to it, at any time, any alcohol from any other source; and
    (d) contains more than 1.15% by volume of alcohol.

    So they are already working on new drinks that will have the same appeal to young drinkers as alcopops, yet conform the the legal definition of beer.

    (Don’t get me started on excise on wine. It is taxed on a different basis and often at a far lower rate than any other alcoholic drink. The whole area of alcohol excise is a mess.)

  11. MikeM says:

    Correction: brandy is taxed at $64.57 per litre of alcohol.

  12. conrad says:

    I agree — the situation starts reminding me more of the US, where it appears entirely unrelated crap that gets tacked on to various things so that they can pass is quite legitimate. It seems like one of the ultimate forms of pork-barrelling for small vested interests.

  13. melaleuca says:

    ” … held up for the sake of Nanny State legislation”

    Rafe, since you support the NT intervention, which is the Mother Of All Nanny State Laws, you are hardly in a position to denounce Nanny State legislation.

  14. Patrick says:

    Nick, it both is and is not standard fare.

    Legislation by announcement is indeed a feature of tax policy, necessarily because when you are announcing ‘fixes’ to the law (which is most tax law) or even plain changes, then it is unpalatable to leave the existing law in place once people know what the change will be (because it may be exploited). So the government acts as if the legislation is in place and then enacts retrospectively to the date of the announcement. As some announced-but-unenacted-amendments date nearly a decade now, this is getting out of hand, particularly in some of the more complex areas. Especially when every change of Government introduces the possibility that a given announcement is no longer supported! One of Rudd’s taxation policies was to reduce this gap between announcement and enactment – but first he needs enough people in Treasury and OPC to draft the laws.

    However this is the first time I am aware of where a wholly new tax has been implemented this way. Generally, a new tax or new tax regime would simply wait for actual enactment and final legislation. That said, few new taxes can be so straightforward as this.

    So both is and is not standard fare.

  15. pedro says:

    If MikeM is correct then why didn’t the government simply say they were bringing alcopops into line? Beats me why the excise on alcohol should apply at different rates, unless you justify it on the basis that lighter drinks will lead to less alcohol consumption because you can only drink so much. You can get really drunk on light beer, but it sure is hard. If that is the justification then it still should be like with like treatment. It beggars belief that young people are only getting so drunk because of the taste of alcopops.

  16. Tel_ says:

    MikeM: Drinking a 700mL bottle of Bacardi straight down at a sitting is typically a lethal dose for a young adult or someone not hardened to drinking. Trying the same thing with a slab of beer tends to be uncomfortable and messy but it’s practically impossible to kill yourself. Humans and alcohol have been partners since the days of flint tools, but beer and wine have a far deeper tradition than any spirits.

    Speaking of wine, there was some theory that we were fostering Australian industry, or at least not taxing to death the little industry that we do have. Grape planting has been rather popular in recent years. Grapes are hardy under drought conditions and a good wine (admittedly something that requires skill and luck and the right materials) has an attractive profit margin. We aren’t going to produce a long term sustainable economy by efficiently stripping our mineral resources.

    There is, of course, a more economical and less moralistic explanation for the tax discrepancy, which is basically what the market will bear — brewing beer at home is amazingly easy (and cheap), while even a basic rum is an order of magnitude more difficult (and dangerous) to make yourself. Thus, govt has more price leverage in the spirits market than in the beer market. Never attribute to prejudice what could adequately be explained by greed.

  17. Rafe Champion says:

    Someone explain to Mel the difference between Nanny State interference and the role of the Protective State to help vulnerable people who are suffering or being exploited.

  18. Tel_ says:

    Rafe Champion: someone explain it to me too.

  19. melaleuca says:

    And Rafe wonders why he was delisted by the Old Catallaxians at the end of the 2008 season. Phew…

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