Treasurer, I have some bad news. You’ve done a decent job, just like the last dozen treasurers before you.
Decent, but that’s about it. Oh sure, you’ve all worked hard. You’ve handed down budgets, lectured us about jobs and GDP, and one or two of you have enjoyed a cigar from time to time – in your own time, of course.
But, frankly, where it mattered, you’ve all squibbed it. Some of you deserve the brickbats ??? you were ideologically blinkered. Others were too unwilling or unable to make the right changes because, well, your colleagues weren’t prepared to risk re-election for something so difficult as – How do I put this? – doing the right thing.
So, you’re relieved. Not permanently, but just until I’m finished fixing the mess. With the help of some of your best bureaucrats, it shouldn’t take long – especially as many of them already know what needs to be done, and their recommendations on just that are gathering dust in the “politically unpalatable” file.
Don’t worry – you can have your job back soon. By the time I’ve finished upsetting the rent-seekers and special interest groups, I’ll be as unpopular as every other treasurer has been through time. When you take the reins back, you’ll be seen as a welcome relief. So, frankly, I’m doing you a favour.
Now, to the first order of business. I’m going to call in the accountants, and let them know that retraining might be required. I’m going to slash the amount of tax regulation. No, not one of those populist “cutting red tape” programs – I’m not aiming for re-election. The real ones, where we’ll get rid of 90 per cent of ridiculous tax deductions and loopholes.
Family trusts are out. They’re just tax minimisation schemes. Yes, yes, the people who talk about them being “vital” for business planning and the like have a point, so they can have their structures, but the tax benefits are gone. We’ll see how “vital” they really are.
Work deductions are gone. Employers will have to foot the bill for uniforms, tools and travel. Ditto self-education expenses. If the education is worth it, you don’t need the deduction. I’m yet to meet an MBA student who wouldn’t do it, if not for the tax break.
Industry handouts will cease, too. We’re not going to spend billions over decades propping up industries for the sake of “doing something” or buying votes. We’ll make sure the workers are retrained, but we won’t be giving money to their employers any more. Yes, yes, tell the steel bosses, the farmers, the smelter chiefs and the rest to form an orderly queue outside my door. I’ll speak to them later.
Right, what’s next? Ah, yes, call the bank CEOs. I’m doubling the bank tax. No, not just to pad consolidated revenue – I’m going to put all of the cash raised by the levy into a sovereign wealth fund, which we can tap if the banks ever need to be bailed out. If they complain, let them know I’ll be on the blower to the top 20 global banks to see if they’d like to open shop in Australia. What’s that? The bankers are happy to pay? Thought so.
And call BHP, Rio and the rest. The mining tax is back on. Tell them I don’t care how much money they waste on advertising this time – I don’t care about re-election. If they’re going to sell irreplaceable national assets, the country deserves fair value for their sale. And that, too, will go into the sovereign wealth fund. We’re not squandering the next boom.
Finished? Not a chance. Salary packaging will be sent to the knackers. That’ll put a decent hole in the tax-minimisation industry. GST will be broadened to all products and increased to 12.5 per cent (with suitable changes to the tax system and welfare so lower wage-earners won’t be worse off).
The tax rules will be properly tightened so companies can’t send profits offshore. Yes, I’m looking at you, Apple, Google and BHP. No-one believes Irish subsidiaries and Singaporean “marketing hubs” should be excuses to pay less tax.
Superannuation earnings in retirement won’t be taxed up to the level of the aged pension, then at marginal rates thereafter. If you think that’ll reduce the incentive to contribute to super, try living on the pension. And remember, your employer contributes 9.5 per cent, not you.
Also, there’ll be a ban on euphemisms. “Asset recycling”, which sounds somehow green and sustainable but is just a weasel-worded replacement for “privatisations” will be called just that. Foolish takeaway
Treasurer, I know you have constraints. Ideology and political reality, well, bites. So take some time off. See the sights. Spend time with the family. You can have the gig back in a year, and blame “the other guy”. And in return, you’ll have a better functioning tax system and a budget that’s structurally balanced – with less distortion and much less money being spent by Australians on managing their tax affairs.
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Scott Phillips is the Motley Fool’s director of research. You can follow Scott on Twitter @TMFScottP or email him at [email protected]苏州美甲学校. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).