Oh for God's sake this is pathetic! On the tax package the welfare lobby can't see past their bibs. The Catholics are outraged that their nursing home residents may be 98 cents out of pocket, the Uniting Church that the price of spuds may go up a little more than inflation. The Australian Council of Social Services want food to be zero rated, which means that food prices should drop absolutely! Yes please, I'm off to the best restaurant in town.
That's the problem, whatever the government does to vary the GST and the tax rates, no group can be quarantined from its impact. We have a progressive tax system, so the rich pay more in dollar terms and in percentage terms. A tax cut must lead to a larger cut to the top end in dollars. The only way to avoid this is to not have a progressive income tax system. You don't seriously want a flat tax do you? Chopping out bits from coverage of the GST can have a similarly regressive impact, for example, the rich consume more food dollars. Leave the coverage broad and go for compensation, but don't kill the goose that is about to lay the golden egg.
The churches and welfare lobby just don't get it. Their flock are part of the community, not apart from it. The plan to change Australia's tax system is the only way to maintain a solid revenue base to fund the services that governments provide to the needy. Perhaps they would rather keep the poor poor? We can't have them losing their flock can we?
An intelligent response to the tax plan would be to support it conditionally, on the basis that should any projections, calculations or assumptions be wrong they can be remedied. I am reminded of the pensioners desire in the late 1980's to have their own measure of the rate of inflation. They fiddled with the Consumer Price Index to see if they could bias it in their favour (bad luck for the rest of us). They found that the alternatives were not good, and after much backsliding let the whole project rest. They realised they were well served by the government's system of measuring inflation. So it will be with the new tax system, future governments will not have a chance in hell of unhitching benefits from CPI, so the poor will be protected. The only thing that could bring the benefit system undone is a tax system that is full of holes. That is the present one. It's leaking like a sieve.
Who is more likely to ask for tax rate increases, including the GST, in the future? The welfare lobby of course. On the one hand they are prepared to go along with those who would fan the concern that the GST will rise, when their position is that current taxes must rise in order to pay the same level of benefits. A GST is far less likely to rise than the current array of taxes. If it does as a consequence of buying out old taxes, so much the better.
The welfare lobby should come to grips with its role. The sort of adjustments they are talking about amount to tens of million of dollars, they are minor in the midst of a $20bn package. The best strategy is to close their ears to the chants of old comrades and manoeuvre themselves into a position where a grateful government will be keen to work with them in the inevitable long debate before the Senate. That is time for fine tuning to take place. The couple of dollars here and there can be put right.
To set out to deny the importance of the package risks leaving the poor at the hands of a weakening tax system that gives the rich too many choices to avoid their responsibilities. A tax system that has too many disincentives for beneficiaries to work, and that taxes some products and not others on the basis of an economy that our grandfather's knew.
Please, don't deny your people a chance to participate.
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