From the AFR:
Shadow treasurer Joe Hockey has promised a Coalition government would be “predictable and stable” and would not engage in tax system reviews as the Labor government has.
Slamming “fiscal embarrassments” like the mining tax and changes to tax perks for workers, and “blatant tax grabs” like the flood levy, Mr Hockey declared that the Coalition wanted to “make life boring”.
“I think people are crying out for stability…We’re not going to have these hairbrained ideas like Rob Oakeshott. No more reviews, summits, so on. It’ll be a very predictable government.”
Perhaps Hockey should check in with his leader, who has already promised to cancel the carbon tax and mining taxes, which doesn’t have the ring of stability to me, whether you believe in them or not. Given the high likelihood that his government, should it win, will face very serious revenue headwinds as growth is challanged throughout its tenure, ruling out any tax changes at this stage leaves only spending cuts to take the brunt of the drive for surplus. So, Hockey is essentially pledging the nation to the path of European austerity.
Zero tax changes also means no room to move on wise tax changes such as a land tax, adjustments to negative gearing, improvements to R&D incentives, and a million other productivity enhancing measures outlined by the Henry Review. Also in the speech, Hockey rightly castigates the Government for its handling of the Henry Review, especially the mining tax:
…the signature taxation failure of this Government remains the botched handling of themining tax. After five failed attempts to get it together the Government now wants to returnto scene of the crime and have another go.My advice to the Government would be to stop digging. And the pun is very much intended!
The Prime Minister and the Treasurer personally got involved in secret negotiations to try andsalvage something from the RSPT wreck. They failed completely and utterly.
The Minerals Resource Rent Tax has hardly raised a dollar in its first quarter despite theGovernment forecasting $2 billion in revenue for its first year of operation.The Mining Tax package has been a fiscal disaster. After initially promising $12 billion inrevenue in just its first two years, it now promises just $9 billion in four years.
The problem is that it has $15 billion of expenditure against this revenue.Only Labor could introduce a new tax that leaves the Budget worse off. And structurallyworse off at that!But these are not just fiscal embarrassments they are sovereign risk creators as well.
Right enough, though the sovergein risk arises from poor execution of tax changes not the changes themselves. We still need a big, fat mining tax that works transparently. But throwing the Review out completely is tossing the baby.
If Hockey’s pledge is not a non-core promise, it aught to be.
