Via Saint, we learn that the Government has broken (or at least significantly tweaked) one of its big spending promises for the election. The “unlimited” child care rebate is now limited to $4000, you’ll need to keep your receipts, and you won’t see anything til 2006. Ross Gittins has the rundown in the SMH.
Remember how the PM said Parliament would be hard at work in the lead up to Christmas making sure all those billions of dollars of goodies would get handed out?
I seem to remember also a bit of commentary during the election suggesting that Howard had finally accepted that women had a legitimate place in the workforce…
The other thought this move raises is the extreme inefficiency of delivering social policy programmes and income transfers through the taxation system. The problems with family payments are notorious. Not to mention the equity issues regarding those who because they have a low income, pay little income tax or who, because they can’t afford an accountant or are confused by the complexity of the taxation system, are not scrupulous about record keeping.
Writing in The Bulletin, Laurie Oakes forecasts a range of measures post July 1 through the Senate to refocus the reform agenda on productivity. A good first step might be to abolish tax returns, all rebates and deductions, separate social policy from tax policy, save an awful lot of money and lower income tax brackets to boot. It’s been done in New Zealand, and Peter Costello promised it here in the late 90s. Ah, promises, promises…
Bill Haydn had it right when he cashed out tax deductions/rebates for dependants and gave the parents the bucks so they could spend it any way they saw fit for the kiddies. It’s called child endowment for dummies. Then Labor allowed the lefties to poke their noses in and stuff it all up. You can’t give money to millionaire parents they all whinged, just like giving some bucks to all school kids for their education. Lefties always put vertical equity ahead of administrative simplicity and horizontal equity. Ah the politics of envy and nanny statism.
Hmmm, observa. I don’t think this is a left/right thing. As I noted above, I’m in favour of administrative simplicity and equity. The Howard government has done a great job of complexifying the tax system and adding all sorts of inequitable social policy features to it…
Hi Mark. A bit late to respond, but I’ve been offline for a while after our modem was wiped out in an electrical storm.
I liked the points you and Observa made about the need for simplicity. They might in effect offer Iron Mark a way back into public acceptance. A simpler and less costly tax system would not only be a political plus, it would be more credible to the doubting voters than promises of tax cuts in general.
For a start, promises are now almost a worthless currency, with the Howard tendency to ditch them as soon as it’s politically safe to do so. (And to be fair, that probably started with Keating.)
Secondly, simplicity would be a godsend to small businesses and to two-income families. Observa has a point that equity may have to be pursued through other means than chipping away at the tax system.
There’s a chance of building up an alternative government approach as well as making Costello and co squirm about past promises on tax reform.
Don, I agree – it’d be good policy, a good way to embarrass Costello, and a positive way to reclaim an economic agenda.
Australia’s tax system is regressive, illogical, and jerrybuilt. its negative effects on social policy are also seen in the disincentives for low income earners to enter the paid workforce. and for people in small business like me (yes, Virginia, lefties own small businesses), well, there certainly is some sense in Labor appealling to a desire to cut red tape and boost productivity.