The Victorian State Council of The Greens updated their Finance and Taxation policies last weekend. Normally, I find their soft-left-populist stances mind boggling. Their tax polices, however, deserve attention – and applause.
On gambling, The Greens stepped past the ‘tax on the innumerate’ position we see elsewhere and understood the real nasty: the economic rents created by government licenses. Those with long memories will recall the Auditor General condemning the botched pokies auction process in 2011 that enriched Victorian pokies operators by an estimated $3 billion. That’s a lot of schools, hospitals, roads or loan repayments swept into private hands.
Gambling taxes to be shifted so that they capture the economic rent provided to gambling venues by the restrictions placed on gaming licences. Taxation and regulation of gambling to be clearly independent of each other in order to avoid conflict of interest in policy making.
But the real gem is their undertaking to end the sleazy and destructive Stamp Duty to be funded by removing exemptions from State Land Tax. Stamp Duty is widely condemned by economists who see it trapping people in and out of housing. As a transaction tax, it seriously injures those marginally attached to home ownership or obliged to move for family or employment reasons.
Replacing stamp duties with land value tax. This change could be implemented incrementally over 10 or more years.
This sounds like the Canberra model being introduced by the ACT government.
Transitional arrangements in changing from a transaction tax to a holding tax are always difficult and certain to be seized on by major landowner interests shielding behind everyone’s distaste for tax and understandable desire to pay as little as the wealthy do.
A better transition is to simply remove all exemptions and credit Stamp Duty paid against a hypothetical SLT from date of purchase.
The Greens also want to end Insurance Taxes and Duties, because they dissuade marginal holders from insuring assets and have significant deadweight costs.
The abolition of insurance taxes and duties as they artificially raise the cost of insurance and result in underinsurance, particularly among low income earners.
Insurance tax reform is a sound, unselfish bread and butter change that suggests The Greens have matured. Their refreshed policy stance might even attract first home buyers driven crazy by unaffordable housing.
The policy revision is yet to be posted on their website. Their existing policy position is here.