From the AFR:
Opposition Leader Tony Abbott will vow to cut the 30 per cent company tax by 1.5 percentage points if elected, ensuring the nation’s largest companies don’t have to pay extra for the Coalition’s paid parental leave scheme and delivering all other businesses a tax break.
The policy, to be unveiled in Adelaide on Wednesday by Mr Abbott and shadow treasurer Joe Hockey, will cost the budget $5 billion over the next four years and about $2.5 billion a year after that, according to the Parliamentary Budget Office.
It is likely to be the biggest single spending initiative from either side during the election campaign. Savings in government spending to offset the tax cut will be unveiled on Wednesday too.
Mr Hockey reiterated on Tuesday comments first reported by The Australian Financial Review 10 days ago that the Coalition would detail how it would pay for all its policies throughout the campaign but will not spell out the overall impact on the budget bottom line before election day.
This means voters will have to wait until after the election to find out when a Coalition government plans to return the budget to surplus.
I guess we’ll know later today how it will be funded but it’s a good idea. As for not telling us about its plans for the budget bottom line, bad idea.
Meanwhile, Joe Hockey is contemplating raising the GST:
Raising the goods and services tax – a measure regarded by many tax experts as the Holy Grail of tax simplification – is on the Coalition’s agenda.
Shadow treasurer Joe Hockey said the Coalition would look at the measures as part of a proposed overhaul of the tax system.
“It’s part of the equation,” Mr Hockey said on Tuesday, adding he wanted “less tax, fairer tax and simpler tax”.
There has long been support in the Coalition for extending the tax and raising the 10 per cent rate to replace other taxes which have a bigger impact on how people spend money.
I would support this as well. In fact the two reforms in tandem are an excellent idea, taxing consumption and boosting competitiveness. However, I would not support broadening the GST base to food, education and health. That will force a disproportionately large burden upon Australia’s most vulnerable. Much better to hike the rate.
