Sunday, October 21, 2012

Bugger tax reform. The ACT is like the rest of Australia after all:

If the most educated state in the nation falls for a scare campaign against sensible tax reform, what hope is there for the rest of us?

One in every four citizens of the Australian Capital Territory has a university degree. In the rest of Australia it’s one in seven.

The Labor-Green alliance that runs the ACT took the 2010 Henry Review at its word. It found there was no role for stamp duties in a modern tax system.

“As a tax on transferring land, they discourage land from changing hands to its most valuable use,” the review said. Stamp duties taxed most heavily Australians “who need to move”.

As stamp duties were phased down it suggested land tax be ramped up, in part because this would dampen the effect of lower stamp duties on house prices.

Textbook stuff. Just like the review’s suggestion that mining royalties be replaced by a super profits tax (something which would be assisting the industry right now if it had been fully adopted).

Kevin Rudd and Wayne Swan ran with the super profits tax and were rewarded with a (successful) scare campaign.

Surely it couldn’t happen in the Australian Capital Territory, where voters were likely to actually understand what was going on?

It did. The ACT Liberal Party campaign on one three word warning: ''triple your rates''. On Saturday night it was rewarded with a 6.4 per cent swing and is now set to have more seats in the House of Assembly than Labor (although Labor will retain government with the support of the Greens).

The lesson is being absorbed throughout the nation. Don’t bother with sensible tax reform - no matter who recommends it and no matter who compelling their arguments - if the campaign against it can be reduced to three simple words.

The Labor stronghold of the Australian Capital Territory has swung sharply to the Liberal Party with key Labor ministers including the attorney general at risk of losing their seats.

The 6.4 per cent swing to the Liberal Party will give it eight of the 17 seats in ACT assembly, just one short of the nine it would need to form government. Labor will continue in minority government with the support of the Greens whose numbers have been halved from four to two.

At issue was a decision by Labor and the Greens to phase out real estate stamp duty and replace it with higher rates in accordance with a recommendation of the Henry Tax Review. It allowed the Liberals to campaign on the three word warning: “triple your rates.”

Greens leader Christine Milne said the campaign showed “a simple negative message can cut through”...

Tony Abbott called on the Greens to accept the will of the people and go into coalition with the Liberals. He said the issue was that the ACT rate increase hadn’t been put to an election, just as the carbon tax had not been put to an Australian election.

The narrow result puts the Coalition in a strong position nationally. The ACT had been expected to rally behind Labor fearing public service cutbacks should the Coalition take office federally. It leaves Labor governing in its own right in just one state; South Australia, and leaves it governing with the support of the Greens in only two - the ACT and Tasmania.

With counting not yet finalised, neither the Labor leader, Katy Gallagher, nor the Liberal leader, Zed Seselja, have claimed victory. Mr Seselja, said he was open to negotiating a coalition government with the Greens but said there would be no Greens in his ministry.

In today's Age

Related Posts

. Canberra is not the problem

. Not leaving Canberra

. Henry's great tax forum speech