Tuesday, October 04, 2011

Today's tax summit - your user-friendly guide:

Why are we having it?

Because Kevin Rudd and Wayne Swan botched their last big attempt at tax reform. Rather than seek opinions about how mining should be taxed, they released details of their Resource Super Profits Tax with the Henry Review on May 2, 2010 and declared they wouldn’t back down. They did back down, one of them lost his job and in September 2010 mining entrepreneur Twiggy Forrest had a word in the ear of independent MP Rob Oakeshott as he was deciding who he would support to to form the next government. As part of the price for his support Oakeshott demanded a tax summit.

Who’s invited?

Just about the most high-powered group of tax experts ever assembled, representatives of special interest groups and some entertainers. Channel nine’s Ross Greenwood and channel seven’s David Koch score invites as “community representatives”. Among the tax experts are Ross Garnaut, Saul Eslake, John Freebairn, Neil Warren, Deborah Cobb-Clark and Chris Evans - not all of them household names, but all of them the specialists who have thought most deeply about the topic. NSW will be represented by Treasurer Mick Baird, Victoria by Treasurer Kim Wells. Nick Greiner and John Brumby return to the limelight by virtue of the membership of the government’s GST distribution review panel. Independent MPs Rob Oakeshott, Tony Windsor, Andrew Wilkie, Nick Zenophon will be present as well as Greens senators Bob Brown and Christine Milne, DLPsenator John Madigan and National MP Tony Crook who sits on the crossbenches. Notably absent will be any member of the opposition. Treasurer Swan says they would have been welcome had they been prepared to be constructive. Swan and Gillard will open the summit, Swan will close it...

What will happen?

It’ll function like a like TV show, streamed on the web. Hosts Michael Pascoe and Paul Clitheroe will take turns hosting discussions about business tax, state taxes, social and environmental taxes, welfare payments, personal tax and governance of the tax system. Standing in the centre of the Great Hall of Parliament House with delegates seated around them in concentric circles, they start the discussion and invite delegates to speak. Different delegates will be seated at the front for each session - those with the most to say. Mr Swan says “no topics have been banned from discussion; participants that mention the mining tax or the goods and services tax won’t have their microphones cut off”. But there are no sessions to deal with consumption tax, mining tax or superannuation - the topics the government would rather not have discussed. Anyone who wants to discuss those topics will have to do so in a session devoted to something else. There will be no communique, just a transcript - no set of recommendations with which to bother the government.

Who to watch:

Former Treasury boss Ken Henry will kick off day two with a ten minute talk about the Henry Review. Also worth watching will be Greg Smith, a former senior Treasury official who crafted many of the chapters of the Henry Review sitting alongside Dr Henry and Heather Ridout of the Australian Industry Group who also worked on the Henry Review. Smith and Ridout know about as much as Henry and are freer to speak, not being government employees.

Dangerous ideas:

Surprising alliances are being formed. The Business Council is arguing demographics mean we will have to be prepared to pay more tax, the sort of line that once would have been the preserve of the Council of Social Service. ACOSS itself is arguing for an end to excessively generous benefits such as the Senior Australians Tax Offset, the sort of line that would have once come from business. The bottlers of Jacob’s Creek, Penfolds and Wolf Blass have broken ranks with the rest of the wine industry and are calling for wine to be taxed per unit of alcohol as is beer, an idea that might have found traction this week were it not for the Treasurer’s trick of ensuring there’s no place at the summit for the discussion of consumption taxes.

Ideas that might get up:

Keeping the whole thing going. Academics and business groups are calling for an ongoing tax reform commission or commission of budget integrity to continue to prod this government and the next long after the summit is over. Eventually we will need unpopular medicine such as an increased GST the argument goes. When the time comes it’ll be better for the arguments to come from a body independent of government with research clout.

Published in today's SMH and Age

Tax Forum Program Sep2011

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