Monday, 25 November 2013

Who Wants to Talk About Taxation? Or: Old People These Days

The Grattan Country Club's Resident Pro, John Daly (if Media Watch asks, I blame Google)
Taxation? Who wants to talk about it? No one of consequence, certainly not the politicians whose task it is to legislate such weighty matters. It seems only civic-minded think-tanks can formulate any substantial policy response to one of the most important areas of national fiscal security.

And so it is that the Grattan Institute and its resident Pro Golfer, John Daly, have published a report titled "Balancing Budgets: The tough choices we need".

If you're not one to read these reports, the best thing about them is that they give away the ending at the beginning! (how subversive!) with what is called an "executive summary" or "overview". 

The long and the short of it is the scope of the GST needs to be embiggened (as I have argued in both PDF report and essay form) and some serious changes need to be undertaken to alter where and how government gets its revenue. None of which the current government (or any subsequent government) will likely have the guts to do. However, to avoid unpalatable options becoming simply impossible, they'd do well to act sooner rather than later.

If even a few of the recommendations in the Grattan Institute's report were instigated, those of retirement age would likely be affected the most. For instance, the pension would be locked away until one reaches 70 years of age and the house added to income tests. This is fantastic in theory, but with an ageing population, politicians will be less likely to do anything that requires upsetting this increasingly vocal demographic

As the opposition movement to the Carbon Tax (and the "boats" and any other societal change of the past decade) demonstrated, the intransigence of Australia's ageing and elderly knows no bounds. Implacable with placards, incapable of critical thought ("that young Neil Mitchell says a lot of sense") and too myopic to see beyond their next caravanning trip, they want the unsustainable government and market-funded largesse they have enjoyed over the past decades to continue unabated.

Many will be more than happy to pass the financial burden (and their massive public medical expenses) to the younger generation who will likely never see one dollar from the aged pension. After all, the aged and ageing have "worked hard" and "paid (their) taxes" all their lives. They deserve a peaceful, relaxing retirement of golfing trips and Queensland holidays, the cost to the nation be damned.

Alas, instead of taking the hard decisions, governments will bicker and argue about the size of the public sector and campaign on "razor gangs" and nebulous "government waste", avoiding nation-changing policy decisions at all cost.

The only way out of this unenviable situation would be a bipartisan programme of far-reaching tax and revenue policy changes, something that would require political leaders of integrity and foresight, rather than boats and brawling.

You'll probably be of pension age before that happens.

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