Posts Tagged ‘Menzies House’

Why we should stop the levy

February 5, 2011 Comments off

The primary way that taxes hurt the economy is by changing people’s incentives at the margin. Each small change in taxes may not seem like a big deal to any one person, and for many people it won’t change their behaviour, but it is possible to measure the change in behaviour and assess the economic consequences through statistical analysis. The economic cost caused by changed behaviour from taxes is called the “deadweight loss” and has been estimated at anywhere between 20% and 40% (depending on the study and depending on the tax). That means that for every $100 in tax raised, the economy shrinks by $20 to $40. So for a levy of $1.8 billion the deadweight loss costs are likely to be in the order of $0.4 to $0.7 billion.

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Budget 2010

May 11, 2010 4 comments

Finally, the night we’ve all been waiting for. Forget Christmas or New Years… it is Budget night that all red-blooded Australians look forward to every year, sitting down with family and friends with a bottle of single-malt and a bag of popcorn and eagerly anticipating the annual throwing of the pork.

But this year was a non-event. Even economists got bored. One eager politics-watcher walked out on our live-blogging last night to go and get KFC.

The short version

* Budget deficit for 2010/11 is $40.8 billion (2.9% of GDP) — which is about $2000 for every man, woman and child. The budget is projected to return to surplus in 2012/13. This has been achieved by an increase in revenue (including the $9 billion/year mining tax), not by a reduction in spending.

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Questioning the climate crusade

April 25, 2010 Comments off

From the 16th to 18th of May the Heartland Institute will be hosting their 4th international conference on climate change in Chicago.

Heartland takes a position that has variously been described as “denialist”, “skeptical” or “realist”, but which I like to call “non-scared”. I say that because the conference includes science contrarians (Willie Soon, Richard Lindzen, Fred Singer, Chris Monckton), but it also includes people who accept the mainstream story of a warming planet caused by greenhouse gases (and I cautiously include myself in that category) but who nonetheless don’t believe this represents an impending catastrophe, and it certainly doesn’t justify rushing into bad public policy.

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Giving away other people’s money

March 31, 2010 Comments off

Politics is strange. If I were to come to your house and take $100 of your money, then spend that money on a bicycle, and then give you the bicycle, you probably wouldn’t thank me. Indeed, you would probably be annoyed. But if a sitting politician does the exact same thing, then they are held up as heroes and thanked for their generosity. Weird.

Yesterday the ABC reported that people in Griffith (the electorate where I will battle Kevin Rudd) were publicly thanking Kevin Rudd for giving them a bicycle. Of course, the truth is that Kevin did not pay for the bicycle himself, but instead took the money from Australian workers and consumers. The thank you note should be written to the Australian taxpayer.

Giving away other people’s money makes for good politics. Everybody likes Santa… so when politicians run around handing out “free” gifts, they are sometimes able to buy support. But unfortunately, it can lead to bad outcomes. Read more…

Abolish the payroll tax

March 27, 2010 5 comments

Governments of all persuasion often claim that they support a strong private business sector, while at the same time burdening business with a range of taxes, regulations and obstacles. One such tax that has been a consistent thorn in the side of the private sector is the state payroll tax.

Payroll tax is paid by businesses based on the amount that they pay their staff. It is literally a tax on jobs.

In many ways, the payroll tax is similar to the income tax. Both drive up the cost of employing people. Both are paid by employers, based on wage payments. Both result in lower take-home pay for workers, higher prices for consumers, and lower profits for investors. The main difference is that while the Commonwealth income tax applies to everybody, the state payroll tax only applies to people working in a medium or large business.

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Fat tax & the liberal tradition

February 17, 2010 3 comments

Earlier today, Stephen Knoll wrote about his campaign for government action to stop people getting fat, and argued that his proposals were consistent with “centre-right” philosophy. He’s half right.

Knoll explained that Australian children are getting fatter, that this will impact on the health budget and that therefore the government should intervene. He correctly pointed out that with our semi-socialist health system people aren’t facing the consequences of their actions and so the current approach is deficient.

But he is wrong when he says that “all potential solutions to the problem however are interventionist and a distortion of free market principles”. Indeed, one of his policy suggestions is fully compatible with the free-market or libertarian philosophy.

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Libertarians & conservatives

February 1, 2010 2 comments

On the right side of politics there has long been a conflict between the “conservatives” and “libertarians/liberals”. The former value religion, nationalism and tradition while the latter value individualism, tolerance and diversity. All good-sounding words.

At first glance it seems that these approaches should conflict. And yet there are people like Tim Andrews, Ralph Buttigieg, Danny Haynes, Jim Fryar, Dan Farmilo and many others who describe themselves as “conservative libertarians” or something similar. How can this be?

To understand this apparent paradox it is necessary to draw a distinction between the “moral” and the “political”. Contrary to leftist dogma, these are not the same things.

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Why the stimulus was bad policy

January 19, 2010 Comments off

There is a general perception that the economic stimulus package was good public policy and saved the Australian economy from recession. It wasn’t, and it didn’t.

Most of the economic commentary in Australia has been fairly simplistic. The standard story goes that the economy was heading for recession, so the government spent lots of money, and that made the economy stronger so we avoided recession. This is the line repeated by the Rudd government and some of the media.

But this story is wrong on several levels.

First, in any meaningful sense Australia did go into recession, and by some accounts we still are in recession. The government is quite right to claim that total GDP growth has remained mostly positive: for the last five quarters it has been +0.1%, -0.9%, +0.5%, +0.6%, +0.2%, with a total of +0.5%. However, the more useful measure of wellbeing is GDP per person, and that measures has been mostly negative: for the last five quarters it has been -0.4%, -1.4%, 0%, 0%, -0.4% with a total of -2.2%.

In short, since the GFC started Australians have become on average 2.2% poorer.

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