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These certainly are exciting times to be advocating an alternative economic framework.
We see thoughout the EU failing economies where tax systems allow the wealthy to siphon money out of the economy, placing the nation under duress -> austerity -> people pain -> firesale asset sales -> wealthy buy in at bargain prices. Dare we say it, but a Rothschild & Rockefeller partnership has developed, earmarking a sweep through the EU with a $3bn war chest.
In the meantime, few politicians have raised concerns about the role land speculation played in blowing the world economy apart.
An emerging trend (outside of IMF and rating agencies dictating austerity) is for nations to increase their sales taxes. The UK, France, NZ and many US states have increased sales taxes to make up for lost company revenue from plumetting growth rates.
This is bad news for the poor who are hit harder by such regressive taxes, but good news for speculators who can carry on with little impediment. Japan's latest PM is desperately re-shuffling his cabinet so he can double the sales tax to 10%. Twenty years of falling land prices have not registered with Japanese policy makers or the public.
Continuing the war cry for consumption taxes is the Melbourne based Grattan Institute, supposedly a progressive body. They have released a report today – Game Changers, extolling a broader based consumption tax (on our food). They claim this will hit another 40% of our spending. The IPA & CIS will be applauding this report. In an age where bureaucrats are pleading for a move towards taxation on fixed assets like Land (see land grabbing this week and housing affordability continually) and off moveable assets, this approach to taxing our food is of concern.
A summary of recent reports advocating a move away from Stamp Duty (a similar transaction tax to the GST) and towards a Land Value tax includes:
- the recent ACT govt’s Quinlan Review on taxation.
- the NSW government’s Lambert Report (NSW)
- the 2001 Harvey Report (Vic)
- Turning Grey into Gold report looking at pensioner savvy reforms.
- and of course the Henry Tax Review.
Read and share our recently released Stamp Out Stamp Duty campaign and sign the petition!
With the Grattan report’s focus on export competitiveness, a broader GST will push up our pricing system, not remove deadweight and COMPLIANCE costs. More paperwork anyone? Using the GST to cut company taxes is ok, but still the wealth concentration this will assist is damaging.
Why should someone on $20K pay the same in GST as someone on $2 million? The regressive nature of consumption tax must be more widely understood.
Of interest is the concerns around pension super and participation noted in the report. More paperwork will do little to assist the growth in small business, where pensioners predominantly can work (in their own business). An electronically tagged GST payment system will be costly to install.
Lastly on the Gratan report, for a big picture type report, increasing GST will do nothing to reduce speculation in land, the behaviour that has blown the world economy apart.
Meanwhile in the UK, just 0.3% own some 69% of UK housing stock according to The Times' Philip Legraine. No wonder house prices are going (slightly) up in a recession era. Such rising prices are strangling the life out of the British economy and ensuring a prolonged downturn for the 99%. One report noted that UK renters will face a £300m increase in rents this year. Do such rent rises reflect effort or entrepreneuriship? They are a drag on the economy. As you may well be screaming, it is privilege that enables such power. Yes, that's the Real Estate 4 Ransom way!
In Australia, the horrors are mounting. It was recently announced that Westfield's shopping centre rents are 52% higher than Saks in NY. With internet shopping on the rise, will there be a trend to short Westfield in the near future?
We continue. Is it fair that Google pays $74K in tax on its $1.1bn in Australian earnings? They channeled $900m of this revenue via the lowly taxed Ireland last year. Telecommunications Minister Stephen Conroy wants to chase them down with transfer pricing legislation that some experts believe will have little effect. Conroy said "“[It’s] just like with the mining tax where we want to make sure Australians get a fair share of the wealth that Australians own."
Conroy has some cheek when he is on the verge of auctioning off the 4G spectrum this October in what some are calling the waterfront real estate of the EMS. The flailings of economic know-how are such that he has called the auction the 'Digital Dividend'. Pity that he is selling it as a lump sum 15 year licence. Please note, the additional data that can be transferred with each iphone upgrade will see the value of this licence skyrocket over these 15 years. A fairer way would be for the licence holders to pay a yearly lease on the yearly value of this scarce resource.
Meanwhile, former Future Fund CEO David Murray wants to flatten company taxes to 20% and increase sales taxes. Behind this is the belief that it will attract foreign capital. Isnt the real magnet for capital (as we have just seen with Google) the prevalent company tax loopholes?
At the AHURI Homelessness Research Conference, it was revealed that there was a 236% increase in rooming house accommodation (last 5 years) according to Professor Chris Chamberlain from the Centre for Applied Social Research (RMIT). Phil Soos reminds us that negative gearing investors are given $50BN p.a according to a Select Comm on Housing Affordability report (p60).
Australia's stunning GDP figures this week can in part be explained by the role deflation is playing on the economy. If you aren't tracking him yet, keep an eye on Leith van Onselen's daily insights (recently interviewed on the Renegades here).
These are just some of the many stories discussed and tracked each week on the Renegade Economists or posted on our facebook groups here and here.
The sad fact is it looks like a lost decade will dominate many nations if their economic policies are anything to go by.
