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Oct 23, 2012

Swan’s mini budget ‘savings' mainly tax increases

… we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute.” – Thomas Paine

Cartoon: By Nicholson 
‘World’s best Treasurer', Wayne Swan’s original budget for this year was initially treated with skepticism over his contention that Chinese growth would continue virtually unabated despite evidence to the contrary.  Since then, revenue has declined dramatically, resulting in a shortfall that has been obvious for nearly as long as the budget has been out there.

As result WBT Swan has announced a ‘revision’ in which he has found what he calls ‘savings’ of $16.4 billion.  The trouble with this is that apart from a reduction of the ‘baby bonus’ for second and subsequent children, all of the others are tax increases of reductions in areas like the Medicare Rebate, which will probably take people out of private insurance into the public sector.
Probably, the worst of these measures is forcing big companies to pay their corporate tax monthly, which will raise the take by $8.3 Billion over four years.  In doing so the amount of investment capital of these companies is reduced along with a substantial increase in compliance costs.
Referring to increased taxes as savings is not just an Australian phenomenon, but is used as a sugar coated poison pill worldwide.  To the man in the street, it may, and is dishonest and deliberately deceitful; however, when the attitude of the state is factored in it may not be strictly the case.
In the main governments do not see any limit on their powers of taxation, other than in some cases Constitutional requirements that can usually be bypassed with clever wording and legal phraseology.  Indeed, former French Finance Minister Jean Baptiste Colbert described the art of taxation as, “So plucking the goose as to get the most feathers with the least hissing.”
In the eyes of Wayne Swan, he is entitled to take whatever he wants from whomever he wants, whenever he wants.  Given this view, it is reasonable to assume that he sees that portion of what the taxpayer gets to keep above what he feels he can take is actually wasted.  To him, a tax increase is actually a preventative measure designed to reduce funds that the taxpayer might otherwise splurge on himself.  It therefore constitutes a saving in his eyes.
This is not the most innovative excuse for a tax rise.  Those old enough to remember the election of the Hawke Keating government will recall that one of their earliest acts, was a tax hike which it was claimed was to ‘reduce the excessive liquidity’ out there in the community.  Apparently, we had so much money sloshing about in our pockets it was causing inflation.

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