The WA Barnett government will be destroyed – who benefits?

The West Australian state election March 11 will be quite a fight. The few opinion polls suggest a handsome victory to the McGowan ALP opposition. ReachTEL has 55-45 two party preferred and Newspoll 52-48 in favour of Labor.

Minor parties campaigning in the ashes of the failed Barnett government could stymie this. Greens and Socialists aside, all plug solidly into voter cultural conservatism.

The Shooters, Fishers and Farmers Party want to abolish payroll tax, stamp duties and state land tax. Not a word on the WA government’s revenues after removing these taxes or the activities it would have to abandon to balance its budget, but put that to one side.

Payroll tax is a handbrake on enterprise. Business must pass it on in lower wages or higher prices – or have the government eats its profits. It also has a Marginal Excess Burden of 41, which means every dollar collected for government costs taxpayers $1.41. A bad tax.

It is worsened by the narrowness of its base – only half of all wages are subject to it, as KPMG Econtech helpfully points out:

“The payroll tax threshold distorts business choice of their size, so business will be inefficiently small. This raises the per unit cost of production and results in welfare loss.
We lose the benefits of specialisation and teamwork.

Argued differently, small business is advantaged by Payroll Tax relative to medium and large businesses. Marginal small businesses would be destroyed if the tax on medium and big businesses was removed and all played on a level field. Is this the outcome the Shooters want?

On Stamp Duty, the Shooters are sound. Taxing transactions traps people in and out of landholding. It is very destructive and should be thrown on the scrap heap. See here and here. We would all benefit from a more flexible and dynamic land market.

But the Shooters undermine it all with their opposition to land tax. We know no one enjoys writing a cheque to the government, but this is a poor reason to abolish the single best tax known to humanity – one on which Australia can make a profit!

Farmers in particular should embrace a well designed land tax. Australia’s Future Tax System recommends taxing land on a per square meter basis. A decent tax schedule would overlook most farmland – except where it has a higher potential use like urban rezoning. The big prices are on the land under cities, not out in the bush.

Instead, farmers should be spitting chips over council rates that tax their improvements like sheds and dams, particularly when the raw land they work is very low value.

The Shooters are unsound on allowing hunting on public land. While this may be a uniting theme to their supporter base, we risk a ‘tragedy of the commons’ if hunters were given free rein in all public reserves.

I would welcome the destruction of the imported feral animals that are eating this country. However, recreational hunters will not eliminate these pests. If the populations fall, shooters will turn to other pursuits – well before extinction and allow populations to recover.

Public land includes national parks, set aside from human activity in perpetuity for their enduring natural significance. I particularly want the feral pests out of national parks, but recreational shooting will not achieve this. Think again.

Sound public policy is too important to be driven by narrow groups on the left or the right. WA’s election will spill the Barnett government; which way the flood goes will be revealed March 11.

Leave a Reply

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.

https://prosper.org.au/2017/01/30/the-wa-barnett-government-will-be-destroyed-who-benefits/