Fed: Who owns what tax is a taxing question

AAP General News (Australia)
04-23-2010
Fed: Who owns what tax is a taxing question

By Colin Brinsden, Economics Correspondent

CANBERRA, April 23 AAP - Possession is nine tenths of the law, so the saying goes,
but not when it comes to tax it would seem.

We often hear the phrase "spending taxpayers' money" when it comes to the federal government
paying for a new initiative, or worse, "wasting taxpayers' money" on things like the infamous
insulation fiasco.

It's an odd concept, because for many of us on Pay As You Go (PAYG), we earn the money
that's taxed, yes, but we hardly own the tax.

It's a bit of a stretch from that fleeting eye over a payslip from net income ("is
that all") to income tax ("that damn taxman") to call it possession.

But then there is the view of the state premiers.

In this week's long-winded negotiations over the government's hospitals reform proposal,
the sticking point for many was - and still is for West Australian Premier Colin Barnett
- they didn't want to give up "their GST".

Their GST?

Surely they mean the consumers' GST, because we actually have the money in our possession
that gets slugged 10 per cent when we spend it on goods and services.

Semantics aside, the premiers and chief ministers no doubt are concerned what bag of
tricks the long-awaited Henry Tax Review will present them, aside from this massive tinkering
with the GST.

After all, one aim of the review is to whittle down the existing 125 federal, state
and local taxes across the nation, particularly when just 10 of them rake in 90 per cent
of total revenue.

While there were concessions on both sides in bringing the hospitals agreement together
- apart from Mr Barnett - Treasurer Wayne Swan didn't cave in and present the premiers
with the tax review as they originally demanded.

Nor has he given in to opposition treasury spokesman Joe Hockey's persistent demands
to see the review.

Mr Hockey pointed out on Wednesday that the treasurer has now had the review for 120
days since its author, Treasury secretary Ken Henry, handed it over.

"That's 120 days that Australians have been kept in the dark about the Rudd government's
secret tax plans," Mr Hockey said in a statement.

Make that 121 and counting.

"The Rudd government has had more than enough time to consider the taxpayer-funded review."

Well, according to Prime Minister Kevin Rudd just a week ago, his budget team were
still working through the review.

It must be a mammoth document, and much, much larger than the 1000 pages claimed by
those said to have seen it.

Mr Swan has repeatedly said it will be released with the government's recommendations
before the release of his 2010/11 budget on May 11.

As such, speculation in Canberra's press gallery when the review might be finally released
remains rife.

By default, someone will guess the right date as the days tick down.

Obviously, it won't be in the next couple of days as the treasurer is in the United
States for the G20 finance ministers meeting, ending with an address to the Anzac memorial
dawn service at the Korean War Memorial in Washington.

Nor would you think it would clash with the release of the key March quarter consumer
price index next Wednesday, the Reserve Bank of Australia's board meeting on May 4 or
the central bank's quarterly statement on monetary policy on May 7.

Which leaves April 27, 29 and 30, and May 3, 5, 6 and 10.

And of course, there is the morning of the May 11 budget.

Let's hope not.

It could also be done over one of the two remaining weekends should the treasurer want
to avoid an immediate reaction from the the financial markets.

But while the review could include a change in mining royalties to a new national tax
on mining companies, this has been heavily speculated in the media for some time, suggesting
it may already have been discounted by the market.

However, such a change could be a reason why Mr Barnett is holding out on parting with
30 per cent of WA's GST revenue for the the national hospitals reform.

Other recommendations are expected to include how savings are taxed, and a simpler
way of doing personal tax returns, to name just two ideas being floated, but likely to
be the tip of the iceberg.

The theory goes on the latter that an 'an optional tax return' would see taxpayers
sent a one-page statement from the ATO that would set out income to the best of their
knowledge, tax cuts based on occupation and any monies due back or owing.

The individual could then assess whether they agree with this assessment, or reject
it and lodge their own tax return.

If this proves the case, let's hope the tax office has ironed out its IT glitches that
saw 140,000 Australians initially miss out on receiving a cheque with their tax refunds
earlier this month.

That was definitely their money.

AAP cb/it/apm

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