Can Fairfax economists please get a lesson in tax…

Coming on the back of five wrong articles in the SMH And the Age on a mythical $8 billion of unpaid company tax (notice that the only paper in the Fairfax fold not claiming there is missing company tax is the AFR – because they actually understand taxation) another Fairfax journalist tells us he can fix the budget, and fix it without cutting expenditures or raising tax. Michael Pascoe finds this magic solution just like another Fairfax economist Peter Martin did a month ago, by saying: “You have the luxury of a third dimension: tax expenditures.” He claims that cutting a tax expenditures are not raising taxes. How simply can I put this. A tax expenditure is where a concession in the tax laws exists, for example the 15% tax rate for super contributions. To do what Michael suggest, and reduce tax expenditures you need to do what??? Increase the rate or the base, which in relation to the 15% tax rate for super contributions means increasing the rate above 15%. ARE WE SUPPOSED TO BELIEVE INCREASING THE SUPER CONTRIBUTION RATE FROM 15% TO SAY 20% IS NOT AN INCREASE IN TAX??!!?? Michael, stop being disingenuous and admit there are only two ways to solve our public finance problems. Raise taxes or cut expenditures. A reduction in a tax expenditure is just an increase in tax… No ifs or buts… I personally would increase the contribution rates but I am not going to claim some pixie dust argument that in doing so I am not raising taxes… Man up Fairfax economists..


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