Thursday, November 07, 2013

Sorting out the trash. Tax shows what matters to Hockey

You can learn a lot about someone's priorities by the way they sort out the trash.

Joe Hockey and assistant treasurer Arthur Sinodinos have sorted through 96 tax measures bequeathed to them by Labor as announcements not yet signed into law.

(That it ever got this far is an indictment of Labor in government. It was keener to announce measures than it was to ensure they were practical and give Treasury the resources to bring them about. One superannuation measure was announced in the budget of May 2012, took effect from July 2012, and didn’t finally become law until June 28 2013 - two days before the end of the financial year for which it had applied.)

Hockey and Sinodinos have sorted the measures into three piles - those they will proceed with, those they will dump or partly dump, and those they will discuss with interested parties but are inclined to dump.

Some of the decisions are no surprise. They were always going to dump the extra fringe benefits tax on employer-provided cars. They said so during the campaign. They were always going to proceed with Labor’s three successive massive hikes in tobacco excise. They meticulously avoided criticising them during the campaign, saying only that they wouldn’t panicked into “a knee-jerk reaction”. It’ll earn them $5.2 billion over four years and much more into the future.

Their priorities show in the measures they dumped, but didn’t need to. Gone is Labor's (minimal) attempt to impose tax on the super fund earnings of retired millionaires. Right now they pay nothing on the earnings of assets in their funds after they have retired (as well as nothing on the super payouts themselves). After a drawn-out battle in April Labor announced a feeble 15 per cent tax on the fund earnings of retirees, but only on the extra earnings after they had passed $100,000 per year. It would have applied to just 16,000 people, all of them millionaires.

At the same time Hockey and Sinodinos have drawn up their own legislation to axe Labor’s Low Income Super Contribution. It pays up to $500 into the super accounts of Australia’s 3.6 million lowest earners, none of them on more than $37,000.

In  The Sydney Morning Herald 

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