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Real tax reform: a love letter to Ken Henry

By John Passant - posted Monday, 7 December 2009


I’d also suggest abolishing the CGT exemption on houses worth more than a set figure, such a figure being determined by the value the rich have in their houses (for example over $1 million.)

I am sure Treasury could easily do the modelling (and probably already has).

The Goods and Services Tax transfers wealth from the working class to the ruling class and so should be abolished.

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Inheritance taxes on estates worth more than say $2 million in aggregate would partly replace the $30 billion or so of GST revenue lost as a consequence, as would a restructured income tax system.

In addition we now need to consider a tax response to global warming.

I am not familiar with the literature here but suggest a carbon tax plus price controls over coal extraction, electricity generation and supply and petrol - if not nationalisation of the coal, oil and electricity industries - to achieve socially useful outcomes.

After all, as both you and I know, market imposed solutions for market created problems (i.e. the pathetic ETS as a response to one of the greatest challenges of all time to humanity) are bound to fail.

The market is the problem, not the solution.

In terms of international aspects of our taxation system, I’d go back to the original model for our attribution regimes and attribute all foreign income to the trustee or investor or controller in Australia irrespective of the country in which that foreign investment arises and the nature of the activity (active or passive) underpinning it.

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Prime Minister Kevin Rudd assures us that the problem is a lack of demand in the economy. My proposals would increase aggregate demand. We could couple these suggestions with real wage increases for workers to also boost aggregate demand.

As I am sure you are aware, the amount of the national income going to labour is at its lowest in over 40 years and that going to capital is at its highest ever.

Arguably the explosion in consumer debt has been a working class response to claw back the wages share lost over the last 26 years since Hawke and Keating began the neo-liberal experiment.

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First published in the author's blog, En Passant, on April 26, 2009



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About the Author

John Passant is a Canberra writer (www.enpassant.com.au) and member of Socialist Alternative.

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