Peter "Smirky" Costello handed down his eleventh budget as federal treasurer this week, and from what I've seen so far, it looks pretty good.
He's forecast a budget surplus of $10.8 billion for the 2006/2007 financial year.
Examining it in depth, the two great achievements of this budget are that all taxes on superannuation benefits for over-60s and RBLs have been abolished.
Which the cynical may like to point out (and there is definitely truth to this) that this is another example of the Howard Government pandering to baby boomers, this is good for the rest of us on several levels:
1. Only a brave future government would consider re-imposing these.
2. We all have to retire eventually.
3. Anything that simplifies tax legislation is pretty good in my book.
The budget hasn't just been about improving the tax situation of superannuation, though.
Income tax rates have been reduced.
As this is the one area that our conservative, sensationalist media can pick up on a possible way to blow holes in the budget, they've already honed in on the pay of people earning $50,000 per annum.
Apparently, they'll only take home an extra $9.81 per week.
Personally I don't have a problem with income tax rates being reduced - we have a bizarre situation in Australia where the corporate tax rate is 30%, while the top marginal tax rate will now be 45% (not including the Medicare levy).
This is designed to achieve more foreign investment, but has the unwanted disadvantage of discriminating against Australian taxpayers in favour of multinational companies.
No wonder people use offshore bank accounts and companies for tax avoidance purposes.
The other angle that our tired and unoriginal media go for when this happens is to compare apples with front-end loaders by looking at someone earning $30,000 a year with someone earning $1,000,000. This comes in the form of, "How much will each group save?"
Naturally, this gets a bite, especially on talkback radio. People can be such idiots.
Families earning up to $40,000 get the full amount of Family Tax Benefit Part A.
And so they should. No controversy here.
Costello has scrapped the cap on subsidised childcare places.
This one does concern me, and not just because I don't have kids.
This is stuffing around with supply and demand on a grand level. The obvious outcome of all this is that childcare itself will climb through the roof as parents scramble to take advantage of this.
And the net result is that the grant itself will end up being meaningless.
Not that anyone will notice this until well after the next election.
Kinda similar to how the First Home Owner's Grant contributed (along with low interest rates) to the most extreme property bubble this country has ever seen. We still haven't seen the complete fallout from this yet.
These were probably the most important new initiatives.
On the whole I like it. I think it's the best budget that he's introduced ever. It has its stupid bits, but who ever claimed that politicians were smart?
Showing posts with label taxation. Show all posts
Showing posts with label taxation. Show all posts
04 April 2006
Tell him he's dreamin'.
In this article penned by David "Kochie" Koch, Peter Costello has given himself 5 weeks to look at ways to reform our horrible tax legislation.
In it, Koch takes a swipe at Costello for even suggesting that 5 weeks is enough time for a serious review.
I have to say that I agree with Koch, here.
5 weeks is an appallingly short timeframe to fix what is some of the silliest legislation in the world.
Lets look at some facts on the our beloved tax laws.
The Income Tax Assessment Act is not one, but two acts of parliament - one from 1936 and one from 1997.
Together, these two acts total over 10,000 pages.
Not including Tax Rulings made by the ATO or the case law interpreting the Acts.
Wikipedia points out that the laws themselves have been amended that many times, that there is actually a sub-sub-sub-sub-section in the ITAA 36 that is denoted as Section 221YHAAC(2)(e)(iii)(A).
The problem with tax in Australia stems from the problem with the law in Australia - consistency is not considered to be important.
Take, for example, juvenile offenders.
In most states, you can be tried as an adult from about age 12 onwards.
Yet you can't vote, drink alcohol, smoke cigarettes, have consensual sex, and quite a lot of other things until much later on. Usually age 18. Or thereabouts.
Thus, it appears, a 12 year old can think and reason criminal acts the same as an adult, but can't think and reason a how-to-vote card.
Staggering.
Other inconsistencies abound, so we can verifiably conclude that dealing with the law in Australia is a truly diabolical process.
Tax law pretty much takes the inconsistency approach, creates more exceptions and buts and leaves us with the underlying conclusion that all Australians fudge their taxes in one way or another.
Not just that, but tax law in Australia works on the basis that you are guilty until proven innocent. Fairly much different to every other criminal law in Oz.
Koch even points this out in his article.
Over the years, these little discrepancies have piled up into a huge, scary monster.
We have a Tax Pack of over 100 pages, where we once had a little form to fill in (I don't remember this - it's something that Koch points out).
Anyway, tax reform requires a bit more than a small commission looking at it over 5 weeks.
Koch mentions that the commission itself consists of Costello, Peter Hendy and Dick Warburton.
The performance of Warburton, though has not looked promising.
Not long after this commission started, Warburton was heard to remark that compulsory superannuation should be considered a tax on business.
I suppose that minimum wage could also be considered a tax too, eh Dick?
Goose.
So we await this commission's findings.
I would like to say "...with baited breath..." but I have absolutely no doubt that any changes recommended by the commission will be cosmetic at best.
In it, Koch takes a swipe at Costello for even suggesting that 5 weeks is enough time for a serious review.
I have to say that I agree with Koch, here.
5 weeks is an appallingly short timeframe to fix what is some of the silliest legislation in the world.
Lets look at some facts on the our beloved tax laws.
The Income Tax Assessment Act is not one, but two acts of parliament - one from 1936 and one from 1997.
Together, these two acts total over 10,000 pages.
Not including Tax Rulings made by the ATO or the case law interpreting the Acts.
Wikipedia points out that the laws themselves have been amended that many times, that there is actually a sub-sub-sub-sub-section in the ITAA 36 that is denoted as Section 221YHAAC(2)(e)(iii)(A).
The problem with tax in Australia stems from the problem with the law in Australia - consistency is not considered to be important.
Take, for example, juvenile offenders.
In most states, you can be tried as an adult from about age 12 onwards.
Yet you can't vote, drink alcohol, smoke cigarettes, have consensual sex, and quite a lot of other things until much later on. Usually age 18. Or thereabouts.
Thus, it appears, a 12 year old can think and reason criminal acts the same as an adult, but can't think and reason a how-to-vote card.
Staggering.
Other inconsistencies abound, so we can verifiably conclude that dealing with the law in Australia is a truly diabolical process.
Tax law pretty much takes the inconsistency approach, creates more exceptions and buts and leaves us with the underlying conclusion that all Australians fudge their taxes in one way or another.
Not just that, but tax law in Australia works on the basis that you are guilty until proven innocent. Fairly much different to every other criminal law in Oz.
Koch even points this out in his article.
Over the years, these little discrepancies have piled up into a huge, scary monster.
We have a Tax Pack of over 100 pages, where we once had a little form to fill in (I don't remember this - it's something that Koch points out).
Anyway, tax reform requires a bit more than a small commission looking at it over 5 weeks.
Koch mentions that the commission itself consists of Costello, Peter Hendy and Dick Warburton.
The performance of Warburton, though has not looked promising.
Not long after this commission started, Warburton was heard to remark that compulsory superannuation should be considered a tax on business.
I suppose that minimum wage could also be considered a tax too, eh Dick?
Goose.
So we await this commission's findings.
I would like to say "...with baited breath..." but I have absolutely no doubt that any changes recommended by the commission will be cosmetic at best.
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