It seems that another whitewash of economic theory is being subtly thrust upon us with the ongoing Henry Tax review. According to Henry, he has re-written economic theory.
The 3 sources of taxation are now labour, capital and consumption. The Corruption of Economics continues with Land, the most essential of all factors of productions, all but left out of the equation.
We predicted that the outcome of this tax review would support a higher GST. We still have a year of compromises to go until the final report, but one would expect this damaging development to continue.
And here we have the property lobby commenting in typical unbiased fashion:
The Housing Industry Association’s acting Victorian executive director, Robert Harding, said a higher GST would be a more efficient money-raiser for the states if it were allowed to replace stamp duty, but he doubted that any government would have the political will to push such a change through.
Marc Moncrief quotes an independent source!
Why is the GST the preferred new medium of tax experts? It is a sleight of hand to introduce regressive taxation. A worldwide development is seeing GST as a means to downgrade the importance of progressive taxation (the lesser of two evils).
As the GST is a flat tax, with no tax free threshold, all citizens and visitors pay the same rate. This hurts the poor more than the wealthy.
If the mobility of labour is cited, surely the progressive means to capture revenue is via a Land based tax. A Site Rental on all land at a flat rate would naturally be progressive. Those living in Toorak have a higher site value due to location than those struggling families forced to live in the sprawling suburbs.
In the above quoted article, Brumby states that the Henry push to remove stamp duties and payroll taxes can only be funded by a lifting of the GST. We wait with baited breath in the hope that some sensibility will be reached by avoiding an increased GST. A higher holding charge on land will remove the speculative impetus that has caused this Global Financial Crisis (GFC). It would also fund the removal of the damaging payroll and stamp duties that we have been lobbying for.