SLE Int with a prostitute red-light_district_road_sign_258435

Two organisations share the acronym PCA: the Property Council of Australia and the Prostitutes Collective of Australia*. One makes a useful civic contribution, the other is a bunch of filthy whores who will do anything for money and deserve universal condemnation for their moral turpitude.

This morning, the harlot group is out in the AFR calling for a 12.5 per cent GST, a universal land tax of 0.25 per cent and a cut in company tax to 27 per cent.

This may seem a useful way forward in the tax reform debate, until you realise the top rate for State Land Tax in Victoria is 2.25 per cent on land over $3 million – applicable to the wealthy landowners the PCA represents – and reducing this to 0.25 per cent would deliver very large windfall gains to the rentier class.

Not only would they make large cash gains, but the lower tax rate would be immediately capitalised into land prices and drive them even higher.

The PCA claims:

In addition, all land, including owner-occupied properties, would be taxed at a flat rate of 0.25 per cent and other existing exemptions would be abolished. That would raise $3.6 billion.

This increased revenue would offset the $19.8 billion it would cost to reduce the company tax rate to 27 per cent and remove stamp duties on conveyances.
Raising $3.6 billion this way goes nowhere toward meeting their lofty tax cuts.

Last week, Grattan Institute found the states raised around $15 billion in stamp duty and a broad-based nil exemption land tax would need to be set at 0.4 per cent to remove it. I don’t think the PCA’s numbers add up – but then, they probably aren’t supposed to.

The Henry Review recommended Australia introduce two taxes: a land tax and a Resource Super Profits Tax to fund the removal of 125 very bad taxes we know are economically damaging. The review modelled land tax at a one per cent rate, calculated on a per square metre basis.

This is the path forward, not in fighting for a larger slice of the pie.

On company tax, reducing the rate is good, but when we consider companies have very little capacity to bear taxation and most of the revenues raised derive from lower wages and higher prices, reducing the rate by three per cent makes very little difference at all. A better change would be to remove company tax entirely and put it in the land.

To the moralisers who Manning Clark called the “punishers and straighteners” wanting to reduce prostitution, changing the tax laws to reduce the burden on labour would do more to open alternative employment opportunities to these vulnerable young men and women and reduce the allure of cash for sex more than any amount of social disapproval.

*more accurately the Australian Prostitutes Collective, but don’t let that stand in the way.