Australia’s newly elected Labor government recently announced its first budget since entering office. On the whole the budget had some merits – tax reductions and a strong surplus. However, the government unfortunately maintained the bloated social welfare system that grew under the Howard government. The opposition leader presented his budget reply speech, in which he vaguely advocated less spending, and reducing petrol excises, but without any real details. I’ll take this opportunity to present my own budget response as I believe that both major parties lack any serious new ideas for the future of the country, are simply maintaining the status-quo, and are essentially socialists. May I introduce Peter’s 6 point plan to prosperity:
1) Abolish all welfare except unemployment benefits, which should be tied to work-for-the-dole. This includes the complete abolition of the various family and child benefits. The purpose of welfare should be to help those who are genuinely going through hard times, not tax the middle class and give the money back to them via rebates and benefits. This implies unnecessary taxation which in turn undermines incentive in the economy.
2) Double the goods and services tax (GST). Taxation is necessary. The question is how to apply taxation. We should aim to apply taxes so as to encourage things that ought to be encouraged, while discouraging things that ought to be discouraged. It is undeniably in the long term interests of the economy if investment and saving are encouraged at the expense of immediate term consumption. Significantly increasing the GST paves the way for this.
3) Use all the proceeds from welfare reduction and GST increase to reduce income, capital gains and company taxes. These three taxes represent the ‘evil taxes’, the ones which stifle economic growth, incentive and entrepreneurship. As such they need to be minimized, even if that entails making up the lost revenue by increasing other taxes, such as the GST.
4) Flatten income tax to be a single flat-rate tax. The current progressive tax system massively undermines incentive for hard working individuals and families, and penalizes those who are successful. Success and hard work are not things which we should intentionally be undermining through economic policy. A friend of mine tole me a great analogy a few years ago – “We used to have a watering can principle to government. Nowadays we have a lawn mower principle”. Lawnmowers need to be eliminated!
5) Make the company tax rate the same as the income tax rate. This will close a huge loophole that effectively allows the super rich to designate themselves as companies and avoid paying the higher income tax rates.
6) Eliminate all tax deductions and offsets, thereby eliminating tax returns altogether. Australia’s tax system is incredibly bloated. I have a bachelor’s degree in engineering and a PhD in theoretical physics and yet I need help filling in my tax return because the system is so incredibly complicated and I can’t figure it out on my own. At the last tax season I enlisted the support of a friend with a master’s degree in economics to help me out. Even with his support we couldn’t figure everything out. If all deductions are eliminated then people will know where they stand financially. Furthermore, an enormous amount of bureaucracy will be eliminated.
I present the motion to the house.