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A point to all the tax talk?

By: Don Woolford
06 October, 2011

It's easy to be cynically dismissive of things like the tax forum.

Words like gabfest come to mind and, certainly, there was a lot of talk from a lot of people who, one suspects, rather like the sound of their own voices.
And yet, for anyone interested in tax and its complexities - and of course that's very much a minority taste even if almost everyone is affected by how government is funded - bringing together employer lobbies and unions, industry associations and charities, academics and think-tankers for two days did produce interesting talk.
Ken Henry, the former Treasury secretary and tax review head, appeared to have a Damascene conversion about the forum.
Early on the first day, after hearing some business and industry groups and the ACTU spout entrenched views about corporate tax, Henry declared proceedings predictable, with a script he could have written in advance.
But 24 hours later, while being the warm-up man for a segment on transfer payments, he said the discussions had been very encouraging.
"Clearly this forum already has demonstrated that it is a very, very worthwhile exercise," he said.
What it certainly demonstrated, though the experts would have known this perfectly well, was the bewildering array of vested interests in a system with a bewildering mosaic of intersections.
The Australian Council of Social Services talked about the long-term unemployed, including the gap between disability and unemployment benefits; 80-year-old Everald Compton talked about how hard it was for older people to get jobs; charities lined up to criticise the lack and cost of housing for the poor. Child care got a mention.
John Wicks of St Vincent de Paul said alleviating poverty was a basic function of government. He proposed a target of seven per cent on the number of Australians living in poverty be set. He didn't say how to define poverty.
Bishop Pat Power of Catholic Social Services, after challenging everyone to contemplate living on NewStart's $35 a day, put in a big word for the working poor, which he said was an unseen group of mainly migrant women.
Leah Hobson of the Australian Federation of Disability Organisations said the disability support system was unfair and broken.
Greg Smith, a member of Henry's tax review team, injected some realism by saying that in the next 10 to 15 years the issue won't be stop the boats, but stop the welfare.
So did the Centre for Independent Studies' Robert Carling, raising that Rubik's Cube of a dilemma, the effective marginal tax rate, which sits at the intersection of rising tax rates and reducing means-tested benefits. No-one seems to have an answer to that.
There were similar morasses when the forum turned to personal tax, where much of the attention was on side taxes rather than the rates and thresholds of income tax, though one businessman thought the rich should be slugged more.
Take negative gearing.
Economist Saul Eslake said there'd be no need to raise taxes if the government went after loopholes and arrangements that favoured the rich. He included in this the tax treatment of trusts and superannuation, and negative gearing.
There were plenty of critics. Points included: most negative gearing is simply helping ordinary people save for their retirement, and ending it would crunch the stock of rental accommodation.
However Eslake got some support from the ACTU. Assistant secretary Tim Lyons called the super tax concessions "One more Baby Boomer party".
Independent Rob Oakeshott, who lumbered the government with the forum, wants a preliminary response before Christmas.
So the unfortunate Wayne Swan, who sat through all the talk, will have to make something coherent from it.
Source: AAP

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