The scent of elections and tax cuts: Democrats offer alternatives

The Democrats argue there is at least $7 billion that could be stripped out of the $30 billion worth of tax expenditures or concessions, but we prefer that spent on improving essential services.

And then there is tax arbitrage – the loss of revenue because smarties work the gap between income tax rates and capital gains and corporate tax rates.

Despite major reform, the tax act still encourages tax manipulation.

What is needed is comprehensive reform that broadens the base, lowers effective tax rates, produces more revenue, and delivers more equity and less inequality. A tall order!

We are unlikely to get comprehensive reform next May, so if Labor and the Liberals insist on tax cuts, lets concentrate on low and middle income Australians.