Debt and taxes

Wealth creation isn't achieved by increasing the burden of tax, writes Senator Cory Bernardi.

It might not mean much to you right now but Greece has gone broke. It is so desperate for cash it has had to borrow hundreds of billions of dollars just to pay its bills.

So riddled with rorts and waste is the Greek economy that it has collapsed under the weight of modern day socialism. You might not recognise it as a variation of the previous socialist experiments, but the association is there for all to see.

The welfare state of Greece has seen lifetime pensions for unsackable public servants, union dominated industries resistant of any industrial efficiency and dozens of overstaffed and inefficient state operated firms.

And here's the rub. The failed state will need more than one bailout and it can only come from nations which have done the right thing. You know, countries that have actioned those common sense things like not spending too much, operating efficiently, saving a bit of money, not paying people to do nothing, not allowing union domination of industries and so on.

Just imagine how you would feel. Having worked hard all your life to make your own country better, stronger and more secure, to then have your hard work shipped off to an indolent welfare state that has lived for decades beyond its means.

Of course it can't happen here - can it? After all, we are rich in resources, we are business friendly and we have a competitive taxation regime.

Perhaps you better think again.

The past two years have seen a massive run-up in the level of national debt. Some estimates are that our Government has now borrowed over $200 billion. Even the most simplistic of calculations put the interest cost on this debt at around $10 billion every year. That's around $200 million every single week.

This debt is a result of wasteful and spendthrift government policies that are an impediment to our long term economic future and prompts the question about how it will be repaid. The options are relatively simple: government can spend less or tax you more.

The modern socialist system offers a new tax solution. It simply locates an industry that is doing well and then whacks a massive new tax on it as a source of government revenue. This is exactly what the Rudd Government is proposing with its Resource Rent Tax.

Industries that are already paying billions in tax will now have an additional taxation burden placed upon them. In some instances it will make resource projects uncompetitive and unviable, resulting in job losses for many Australians.

Now I know these companies are already making a lot of money. And they are already paying a great deal of tax. If we make them uncompetitive then we will all suffer the consequences.

The recipe for the creation of wealth isn't to increase the burden of taxation.

It is to offer greater reward to those prepared to take the risk of making a profit, whether they be a small business or an industrial giant.

Any government with an eye on a future beyond the next election would realise this and be fighting to lower taxes for all Australians and Australian companies.

Tax reform is not about new taxes but should be about lowering taxes. I only wish the Rudd Government thought the same way.

Senator Cory Bernardi is the Shadow Parliamentary Secretary Assisting the Leader of the Opposition and a Senator for South Australia. His personal blog can be found at http://www.corybernardi.com.

Comments

[Clinton Mead]

1.

Good article, but isn't this a bit of the pot calling the kettle black?

The modern socialist system offers a new tax solution. It simply locates an industry that is doing well and then whacks a massive new tax on it as a source of government revenue.

Sounds like the maternity leave tax.

I've yet to hear the Liberals make a serious commitment to spending cuts. With the Liberal's socialist green agenda (government bureaucracy funded green projects), lack of opposition to a Federal health takeover, and the fact that Abbott almost does a backflip anytime anyone near him even mentions public service cuts, its just a matter of "who's the better socialist" this election.

Tax reform is not about new taxes but should be about lowering taxes. I only wish the Rudd Government thought the same way.

I only wish the Abbott opposition thought the same way.

[Stephan knoll]

2.

That is rather simplistic Clinton. The scheme will help to improve the productive capacity of the economy by increasing the participation rate, the super profit tax does nothing more than tax successful industry.

Cory, I think your article is quite valid and your commitment to small government well documented.

[Vikas Nayak]

3.

How does it do that Stephan?

A 1.7% levy is about $80000 on a company earning $5 million, more on larger companies.

Thats 1 less job a year lost to a levy. Unless you're saying that $80000 taken from 1 company will suddenly generate job's from all those women taking 6 months off to have a kid?

Its just a policy that encourages mediocrity and punishes success. The irony is that the multinationals (the ones that will be most hit by this levy) are the ones that were championing the cause saying that they already do it.

[Clinton Mead]

4.

Stephan: How does the Maternity Leave scheme increase the participation rate?! All it does it take from working people to pay for others expenses. It reduces incentive for both workers and those people receiving benefits to work.

[Michael Sutcliffe]

5.

its just a matter of "who's the better socialist" this election.

I'm a Liberal kinda guy, Clinton, but it's got it's got to be said. Some of us are getting a little sick of it.

[Michael]

6.

The maternity leave scheme is perhaps a more abhorrent instance of government intervention than the resources tax, because it meddles with our families more than our finances. It absolutely disgusts me, and for it to come from a "social conservative" adds to my ill-feeling.

The taxation and welfare system already thoroughly punishes women who wish to be mothers more than workers and this just knocks them further. And financially it acts as a disincentive for employers to hire workers, to invest, to grow the companies that provide for our prosperity. Abbott's scheme is socialism with both sides of its sword (aimed at our families and livelihoods) thoroughly sharpened.

Cory, I hope you stick by your conservative principles--socially and economically--and vote against this rotten scheme.

[Russell]

7.

There should be equal pay for all childcare providers!!!!
Where is the equal pay for stay-at-home mothers???
Why is this a business funded scheme rather than a taxpayer funded scheme???
My advice to Tony Abbott and the Libs: ditch this stupid maternity scheme and show some real equity and justice for mothers who actually look after their own children rather than dropping them off at childcare farms on their way to work.

[Michael Sutcliffe]

8.

There should be equal pay for all childcare providers!!!! Where is the equal pay for stay-at-home mothers???

I assume you're including stay-at-home fathers as well!

[Russell]

9.

My belief is that a certain amount (let's call it a 'childcare voucher') could be given to all parents of pre-school aged children - yes, both stay-at-home mothers and/or fathers - and they could spend it as they pleased on either childcare or to assist their home care role.

[John Redding]

10.

I suspect Cory didn't support Abbott's paid parental policy - after all, Abbott never consulted his collegues, but just announced it. What was Tony thinking?

[Sean Garman]

11.

Great... just as Rudd announces the most irresponsible economic policy for the past thirty years we have people here talking about the parental maternity scheme. People, do you want to attack Abbott or do you want to replace Rudd and his wealth-destroying resources tax?

[Stephan Knoll]

12.

The scheme increases the participation rate because it encourages women to join and stay in the workforce. With an ageing population and skills shortages best solved by local people Tony Abbott has put this idea forward as being pro family, a central liberal platform, and one that helps to solve future demographic issues.

[Stephan Knoll]

13.

It also helps to encourage responsible parenting. Parents I am sure would prefer to stay at home with their children rather than dropping them off to childcare, this policy helps them to raise their children properly.

[John Redding]

14.

It's not pro-family. It will mothers out into the workforce away from their children, leaving them to be raised in institutions - much like orphans.

[Clinton Mead]

15.

Sean: Its not taxation that's the problem, its spending.

I personally think the income tax is worse than the resources tax.

At least there's some moral justification for taxing non-renewable resources, because at the very least you can claim you're taking something from the state and not replacing it.

I'm not supporting the resources tax, but I don't think its as bad as other taxes such as the income tax.

Abbott's maternity leave scheme however, is essentially welfare spending.

We need less of that, not more.

[TimP]

16.

> People, do you want to attack Abbott or do you want to
> replace Rudd and his wealth-destroying resources tax?

I think most of us want to replace Rudd, but we want something decent to replace him with, and a lot of commenters on this blog feel that the maternity scheme means that Abbott doesn't qualify.