Greens to block debt tax, pass fuel excise lift

ScreenHunter_01 Oct. 23 08.38

By Leith van Onselen

The Abbott Government looks set for a fight to get its Budget deficit levy on high income earners through the Senate, with Greens leader, Christine Milne, vowing to opposing the measure on the grounds that it is not permanent. From The Canberra Times:

Senator Milne said the party opposed the levy because it was not a permanent increase in taxation on the wealthy.

Ms Milne said the increase was a smokescreen for an “ideological” attack on poor Australians...

“Long term structural adjustment is what is necessary. Come up with a marginal tax rate [increase] that’s permanent and that’s a different thing.”

With the Greens set to oppose the debt tax, the fate of the measure would rest with the Palmer United Party, which has vowed to oppose all tax increases, and Labor, which has attacked the measure repeatedly.

Meanwhile, the news is better for the Coalition on its planned re-indexation of fuel excise, with the Greens declaring their support. According to Business Spectator, Senator Milne has lauded the re-indexation of fuel excise as a long-term structural change and described John Howard’s original decision in 2001 to freeze excise as “just cheap politics”.

My own position on these issues happens to align with the Greens, albeit for different reasons.

I oppose the debt levy because it would effectively shift the tax burden even more onto employees, when fundamental tax reform is instead required to broaden the tax base, and improve efficiency and equity. The deficit tax is also a short-term fix to what is essentially a long-term structural Budget issue.

On the other hand, I believe there are sound reasons to re-index fuel excise, including broadening the tax base away from income tax, improving overall taxation efficiency, as well as improving environmental outcomes. Raising fuel excise would also go some way to closing the $5 billion Budget hole left by the Howard Government when it erroneously froze fuel excise indexation in 2001.

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. Getting rid of the carbon tax but then increasing fuel tax seems like a bit of a waste of time since they both achieve roughly the same thing!

    Tough for labour to oppose a tax on the rich but at the same time can you imagine the reaction from tabbot and co if labour had tried to introduce the same thing?

    • Good to see that I am not the only one who thinks the temporary status is an issue.

      It’s like saying we’ll make everyone pay forever but these guys only get it for a few years.

      I’ve given up on any party introducing a real structured reform across our whole economy. The best I hope for now is for PUP to just sit there and block everything. Keep the status quo is the best realistic outcome for Straya.

    • arescarti42MEMBER

      If i recall correctly, the carbon tax wasn’t levied on transport fuels, so it wouldn’t have had any effect on the price (unless you think service stations passed on the increase in the electricity used to pump the petrol out of the underground tank and into your car).

    • Fuel excise and the carbon price work in completely different ways and have different purposes. The carbon price is aimed at changing investment decisions among electricity producers so they will reduce their CO2 emissions – the fewer emissions, the less they would pay. The carbon price is not levied on consumers, who were compensated for its effect on them.

      Because the costs of environmental damage will rise with CO2 emissions, to the extent that the carbon price shifts investment in favour of green energy, it is also a future cost-saver – an investment made by this generation in the welfare of the next.

      Excise is a tax on consumers and on all businesses other than those engaged in mining, agriculture and fishing. It has a repressive effect in general. It cannot have any effect on the generation of electricity because it does not tax coal or gas generation. It mainly taxes road use.

  2. migtronixMEMBER

    Good! And you can stick 3d1k!

    When these jokers start to haggle with the Greens all your LIES LIES LIES will come home to roost!

    Worst.Ideologues.Ever.

  3. Internal Green politics is always amusing. There is the Green Greens like Milne and Waters and there are Red Greens like SHY, Rhiannon and Siewert. They can’t decide if they are Environmentalists or far leftists.

    Basically it is a cope out to say that because it is not permanent that the deficit tax should be opposed.

    • “Basically it is a cope out to say that because it is not permanent that the deficit tax should be opposed.”

      I disagree.

      All the cuts that will be made, the agencies that will be abolished or merged, and the assets will be sold are permanent decisions (or will at least require new legislation to undo).

      I don’t think it’s unreasonable to expect a permanent tax/levy in return, otherwise the Coaltion will be able to justify “sharing the pain” when it’s really only a temporary sharing of the pain and tax rates will automatically return to their usual level in a few years.

      Not to mention that supporting the temporary levy allows the Coaltion to avoid taking responsibility for deliberately excluding tax and tax expenditures from the COA’s terms of reference.

    • Not really, the debt levy is a joke, especially when you consider it against the tax-increase-by-stealth that will be taking place thanks to bracket creep.

      I would love to see the Greens taking the Libs to task over bracket creep.

    • “Internal Green politics is always amusing”

      Every party has internal philosophical differences. There is nothing remarkable about that.

      • casewithscience

        Internal green politics is just a re-hash of the discussions in the Socialist alliance in university.

        Internal labor politics is violent and scary (see shovels left at people’s doors).

        Internal liberal politics is censored (cause they won’t share with the little people).

        Internal national politics is done at a country pub (and the policies in the lav afterwards).

  4. The budget will prove the lies of this fraudulent government.

    If ever a senate had a valid reason to block supply (well at least since Whitlam government’s pursuit of loans through Tirath Khemlani), this senate is the one.

    Abbott has no mandate for most of the measures he is proposing (based on the reporting of budget leaks).

    He baldfaced lied, lied, lied, lied, lied or failed to seek a mandate on most of his likely changes.

    Remember the Abbott tax every time you put fuel in your car.

    • I understand the Coalition was desperate to get back in power, but there was always going to be a cost for their behaviour in Opposition. I mean you can’t accuse the other side of lying for three years then get into government and break promises without consequences.

  5. Is a temporary levy better than doing nothing? It kicks the structural reform issue down the road.

    Hockey is trying to make everyone hurt a little, because politically his master promised too many things to get elected.

    But right now, given the political constraints, what are his options?

  6. My own position on these issues happens to align with the Greens

    You’ll be voting Green then Leith? I think Mr Grumpy voted Green last year. That should annoy 3d1k no end.

  7. David Trebeck appeared biefly on 7:30 last night:

    SABRA LANE: When John Howard froze fuel indexation in 2001, he ordered a review into fuel tax. Mr Trebeck headed that inquiry.

    DAVID TREBECK, FUEL TAX INQUIRY HEAD: It was rejected in its entirety on the night that it was released and it was released on Budget night, which guaranteed that it didn’t get much press.

    SABRA LANE: The report was dumped because it recommended that fuel indexation be reimposed and applied to other fuels – just what that government didn’t want to hear.

    Mr Trebeck believes it would be better to scrap fuel taxes and lift the GST instead.

    DAVID TREBECK: GST these days is the Governments main indirect tax instrument. And, in our mind, it would be better to abolish fuel tax, actually, and increase the GST. But our terms of reference didn’t invite us to go there.

  8. “Greens leader, Christine Milne, vowing to opposing the measure on the grounds that it is not permanent”

    Pretty sure she was the one that blocked the emissions trading scheme – which sacked Rudd, forced the introduction of the Carbon tax which sacked Labor and brought in Abbott.

    Milne has to go – the Greens are running a scorched earth policy because they thought that they had momentum, history and natural justice behind them.

    Greens will be members of the museum of former Australian parties, led by Kernot and Lees, Milne and Young.

    They have Brandt and the luminary Ludlum – and yet they offer the most excruciating, raw oats speech of all time.

    Yup – Milne MUST GO.