Kevin 'Mini-Me' Rudd is no John Howard

Having fewer tax brackets and a flatter system provides incentives for individuals to aspire to higher paid work, put in additional hours of overtime and seek promotion.

The Coalition also “broadened” the tax base by introducing the GST. A sales tax does not act as a disincentive on the productive capacity of individuals: it does not make it less attractive for people to earn more money.

GST shifts more of the tax burden on to the rich. It taxes the rich more because they spend more. While it is true that the GST raises the marginal propensity of low income earners to pay tax, in absolute terms the GST results in the wealthy paying more tax in absolute dollars because they spend more money.

Sales taxes like the GST are tax “best practice”. That’s why most economies in the world have one, usually taxing more than the 10 per cent charged in Australia (for example, the comparable tax in the United Kingdom - VAT - is charged at 17.5 per cent).

The Labor Party remained adamantly opposed to its introduction because of its alleged impact on low-income earners, even though income tax concessions resulted in a net benefit to low income taxpayers.

It must be admitted immediately that the introduction of the GST could have been better. It would have been a much simpler system, with less red tape, if it was introduced as the Coalition had intended it: a flat rate on all goods and services, no exceptions. But in order to get the Bill through the Senate, the Coalition was required to make a concession: it had to acquiesce to the Democrat Party’s demands for no GST on fresh food and vegetables. This adds significantly to the cost of businesses trying to work out the applicability of GST to certain goods, nullifying some of the benefit that tax simplification should have brought.  Nevertheless, the introduction of the GST was an important step forward in tax terms.

Moreover, with the introduction of the GST, the Coalition was able to give teeth to the States’ Grants Power under the Constitution. By having more money to throw to the states, the federal government could finally demand changes to the way things were being done (poorly) by the states. One big push was the scrapping of a host of duties and levies in individual states. Stamp Duty is still around, but - thanks to the Howard Government - we now no longer have silly taxes like debits tax, taxes on cheques, accommodation tax, or financial institution duty.

A host of other taxes are due to be phased out in line with the Commonwealth Heads of Government Agreement, despite frequent opposition at a state level by ALP representatives.

Stamp Duty and the legal issues it generates complicates transactions and deals undertaken by companies and individuals. Money that should be spent on generating economic activity, building, investing in new assets and creating more jobs is spent on tax and legal advice as companies spend time and money investigating the duty consequences of transactions. This is a waste. These taxes are not just a loss of money for those businesses; they are a loss of wasted business energy and time that slows down the real engines that drive our national and state economies.

Admittedly, this duty remains in place. But once, the negative effects of such taxes were much higher - because there were many more of them. Peter Costello pushed the timetable for phasing out state indirect taxes. He saw the benefit of simplifying and abolishing indirect taxes. The state Labor governments did not. They simply took credit for the reforms Costello pushed. Like Rudd now, state Labor governments have taken credit for the Coalition government’s architecture.

None of these reforms would have been pursued by a Labor government, even under Rudd. Even though he creates policy reflective of Coalition ideology, “when it comes to” important issues such as tax reform, federal-state funding issues and red tape, Rudd’s Labor Party comrades will always ensure that the party reverts to socialist principles.

Liberal Party attacks on Rudd as an “old-fashioned socialist” have had little media resonance (and sit oddly with the later accusation that he wishes to be (or wishes to be seen as) a Liberal, as pointed out above). Certainly, such accusations do not really reflect the current Rudd policy platform.