http://archive.malcolmturnbull.com.auRSS feeds for Malcolm Turnbull MP60http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/65/Malcolms-OpEd-from-The-Australian-about-tax-reform.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=65http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=65&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/65/Malcolms-OpEd-from-The-Australian-about-tax-reform.aspx AS a result of reforms implemented by the Coalition in July 2000 (which Labor opposed), dozens of inefficient taxes have been or soon will be eliminated, as long as the Labor states honour their commitments. The list includes wholesale sales tax, financial institutions duty, debits tax, stamp duty on marketable securities, conveyancing duties on business, stamp duties on leases, stamp duties on mortgages, bonds and debentures, and the bed tax. But tax reform is like painting the Sydney Harbour Bridge: the task is never complete. The Australian people deserve a tax system that is efficient, fair, internationally competitive and guarantees a low overall burden oftaxation. That is why on March 26, in a speech to the Sydney Institute, I announced that distinguished economist Henry Ergas would assist the Coalition in a full review of Australia's system of taxation: federal, state and local. One of the key objectives will be to explore options for reducing the burden of taxation generally. In the same speech I predicted that, having driven the tax-reform agenda while in government, the Coalition would do so again from Opposition. It did not take very long for that prediction to come true. Less than four weeks after I announced the creation of the Ergas review, the Rudd Government released its initial report on the 2020 Summit. The report encouraged the Government to undertake a comprehensive review of state and federal taxes. Mr Rudd then followed that up with an announcement on the ABC's The 7.30 Report that he thought it was time to look at a root-and-branch reform of the Australian taxation system. So, after having shown little interest in (and indeed a great deal of hostility towards) tax reform for more than a decade, Labor has been forced into looking as though it is doing something about tax. If the lofty standards that the process-obsessed Rudd Government has set itself are any guide, then looking as though one is doing something on tax must be considered progress. One may even paraphrase one of Rudd's most oft-cited philosophers - chairman Mao Zedong - and describe it as a great leap forward for Labor. But the real question is whether Rudd will follow the Coalition's lead and investigate ways of reducing the overall burden of taxation. Evidently not. The initial report from the summit makes no mention of reducing the overall tax burden. Instead, many of the big new ideas from the summit involve increasing existing taxes (such as those on cigarettes and alcohol) or levying new taxes (the fat tax). If Labor adopts these proposals, which taxes will it cut to fulfil its commitment not to increase tax revenue as a proportion of gross domestic product? The Prime Minister's summit ended with a recommendation for more than 20 new agencies and substantial funding programs, but with no proposals to cut existing government programs. Since government spending is ultimately financed by taxation, that can mean only one thing: the overall tax burden will rise under Labor. Given Labor's record on tax, none of this is surprising. It opposed the income tax cuts associated with the GST and the income tax cuts of 2005, which reduced the 17 per cent marginal tax rate to 15 per cent. In 2005 it also rejected measures that provided tax relief for seniors and improved the international competitiveness of our tax system. And at the 2007 election Labor had to be dragged kicking and screaming to the polls on tax cuts. It proposed to cut taxes only after the Coalition announced its intention to do so, and Labor's election tax cuts for low and middle-income earners were an exact replica of the Coalition's. Shamelessly, Labor claims these cuts were its idea all along. And, to top it all off, it appears to have backed away from its campaign promise to eventually reduce the top income tax rate, flatten the income tax system and reduce the number of rates from four to three. There is every indication that these aspirational tax cuts were really a politically expedient pledge that could be discarded at will. Let's hope Rudd's commitment to undertake root-and-branch tax reform does not suffer the same fate and become a great leap backwards for the Australian economy. adminFri, 25 Apr 2008 02:39:00 GMTf1397696-738c-4295-afcd-943feb885714:65http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/151/Mr-Metoo-is-back-to-talk-tax.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=151http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=151&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/151/Mr-Metoo-is-back-to-talk-tax.aspxAS a result of reforms implemented by the Coalition in July 2000 (which Labor opposed), dozens of inefficient taxes have been or soon will be eliminated, as long as the Labor states honour their commitments. The list includes wholesale sales tax, financial institutions duty, debits tax, stamp duty on marketable securities, conveyancing duties on business, stamp duties on leases, stamp duties on mortgages, bonds and debentures, and the bed tax. But tax reform is like painting the Sydney Harbour Bridge: the task is never complete. The Australian people deserve a tax system that is efficient, fair, internationally competitive and guarantees a low overall burden oftaxation. That is why on March 26, in a speech to the Sydney Institute, I announced that distinguished economist Henry Ergas would assist the Coalition in a full review of Australia's system of taxation: federal, state and local. One of the key objectives will be to explore options for reducing the burden of taxation generally. In the same speech I predicted that, having driven the tax-reform agenda while in government, the Coalition would do so again from Opposition. It did not take very long for that prediction to come true. Less than four weeks after I announced the creation of the Ergas review, the Rudd Government released its initial report on the 2020 Summit. The report encouraged the Government to undertake a comprehensive review of state and federal taxes. Mr Rudd then followed that up with an announcement on the ABC's The 7.30 Report that he thought it was time to look at a root-and-branch reform of the Australian taxation system. So, after having shown little interest in (and indeed a great deal of hostility towards) tax reform for more than a decade, Labor has been forced into looking as though it is doing something about tax. If the lofty standards that the process-obsessed Rudd Government has set itself are any guide, then looking as though one is doing something on tax must be considered progress. One may even paraphrase one of Rudd's most oft-cited philosophers - chairman Mao Zedong - and describe it as a great leap forward for Labor. But the real question is whether Rudd will follow the Coalition's lead and investigate ways of reducing the overall burden of taxation. Evidently not. The initial report from the summit makes no mention of reducing the overall tax burden. Instead, many of the big new ideas from the summit involve increasing existing taxes (such as those on cigarettes and alcohol) or levying new taxes (the fat tax). If Labor adopts these proposals, which taxes will it cut to fulfil its commitment not to increase tax revenue as a proportion of gross domestic product? The Prime Minister's summit ended with a recommendation for more than 20 new agencies and substantial funding programs, but with no proposals to cut existing government programs. Since government spending is ultimately financed by taxation, that can mean only one thing: the overall tax burden will rise under Labor. Given Labor's record on tax, none of this is surprising. It opposed the income tax cuts associated with the GST and the income tax cuts of 2005, which reduced the 17 per cent marginal tax rate to 15 per cent. In 2005 it also rejected measures that provided tax relief for seniors and improved the international competitiveness of our tax system. And at the 2007 election Labor had to be dragged kicking and screaming to the polls on tax cuts. It proposed to cut taxes only after the Coalition announced its intention to do so, and Labor's election tax cuts for low and middle-income earners were an exact replica of the Coalition's. Shamelessly, Labor claims these cuts were its idea all along. And, to top it all off, it appears to have backed away from its campaign promise to eventually reduce the top income tax rate, flatten the income tax system and reduce the number of rates from four to three. There is every indication that these aspirational tax cuts were really a politically expedient pledge that could be discarded at will. Let's hope Rudd's commitment to undertake root-and-branch tax reform does not suffer the same fate and become a great leap backwards for the Australian economy.adminFri, 25 Apr 2008 01:37:00 GMTf1397696-738c-4295-afcd-943feb885714:151http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/66/Australias-Inflation-Challenge.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=66http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=66&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/66/Australias-Inflation-Challenge.aspx  As I have said many times, inflation is a serious economic issue especially in an economy like ours with high growth and low unemployment. In fact inflation is too serious and too complex an issue to be mismanaged and misrepresented by Wayne Swan. Mr Swan has stated again and again that inflation is out of control; that "the inflation genie is out of the bottle". The Reserve Bank Governor, Glenn Stevens, has been obliged to contradict the Treasurer's reckless talk and he did so because he knows, and Mr Swan should know, that if you talk up inflation you exacerbate inflationary expectations. Mr Swan's inexperience leads him into acting in a way no other Treasurer has ever acted - actually seeking to worsen economic conditions to make a partisan political point. I have always emphasised the gravity of the inflation challenge. However, unlike Mr Swan, I am concerned about Australians' living standards, jobs and their ability to service their mortgages. Now, we know that the world's largest economy, the United States, is sliding into recession. Central Banks around the world are cutting interest rates to stave off economic slowdowns. In the US where I am now, housing prices have declined by 11% over the last year and many economists expect them to decline further - a full 30% from their high of a year or so ago. This collapse in the housing market coupled with a tightening in credit around the world has already impacted Australian families. Banks have raised interest rates to home buyers, businesses are paying more for the debt they need to run their businesses and less credit is being made available. These are very challenging times - the International Monetary Fund has described the present crisis as the worst since the Great Depression of 1929. Now in those circumstances, we need to respond with great care and responsibility and recognise that while there are inflationary pressures evident in our economy many of them are beyond our control, such as higher oil and commodity prices. Contrary to Mr Swan's claim again today, inflation has not been on the march for more than two years: the RBA forecast inflation was going downwards in June 2007; and Treasury forecast inflation was falling in October 2007. Similarly, contrary to Mr Swan's claim, the RBA did not issue 20 warnings to the Government that capacity constraints were causing inflation. The RBA has indicated that it doesn't issue warnings to the Government. The global credit crisis is going to put more upward pressure on rates and slow economic growth. That is why I encouraged the Reserve Bank not to raise official rates earlier this year and to wait to see how the international situation developed. --ENDS-- adminThu, 24 Apr 2008 02:40:00 GMTf1397696-738c-4295-afcd-943feb885714:66http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/67/Consumer-Confidence.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=67http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=67&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/67/Consumer-Confidence.aspxThe drastic decline in consumer confidence should come as a final warning to the Rudd Government to stop talking down the economy. According to the Westpac-Melbourne Institute index of consumer sentiment, released today, confidence is at its lowest level since June 1993, 24.2 per cent below where it was just 12 months ago.  This is the latest in a series of surveys which show consumer confidence has collapsed since the election of the Rudd Government. Since taking office Kevin Rudd, Julia Gillard and Wayne Swan have all been claiming inflation is running out of control. We know the purpose of using this exaggerated and overblown rhetoric is to trash the Howard government’s economic record. But the use of such language by the new Government comes at a cost.  It affects consumer sentiment, business confidence, and inflationary expectations. And in economics these are crucial to the future performance of the economy. All of this is taking place against an uncertain international economic background. The position of the global economy is quite delicately poised.  The IMF has cut its forecast for global growth this year and says that world economy will expand 3.7 percent in 2008, the slowest pace since 2002. The United States is currently experiencing considerable economic difficulties. Overnight, for example, the IMF released a report that estimates that falling U.S. housing prices and rising delinquencies on mortgage payments could lead to aggregate losses of close to $1 trillion. The Australian economy is resilient and well placed to ride out the global turmoil. But it is vital that public figures not use immoderate language on our domestic economic conditions, lest they risk exacerbating any potential economic fallout that may flow on to Australia from the US and global economic situation. The RBA Governor, Glenn Stevens, last Friday said very clearly that inflation is under control and will be dealt with. After months of talking down the economy and talking up inflation, it is time that Mr Rudd, Ms Gillard and Mr Swan finally get the message. adminThu, 10 Apr 2008 02:42:00 GMTf1397696-738c-4295-afcd-943feb885714:67http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/68/Review-of-Australias-Commonwealth-State-Territory-and-Local-Tax-System.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=68http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=68&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/68/Review-of-Australias-Commonwealth-State-Territory-and-Local-Tax-System.aspx  I have asked distinguished economist Henry Ergas to conduct an examination of the many taxes in Australia at various levels of Government and to report to the Opposition on options for reforming the tax system. Today I release the terms of reference for the Ergas Review (see below). The last major reform of Australia’s tax system was undertaken by the Coalition almost 10 years ago with the move to A New Tax System (the GST reform).   While those changes have worked well – and indeed, are now endorsed by the ALP which previously strenuously opposed them – it is important to periodically examine on a holistic basis the nature of our tax system.   This is all the more important as the world economy becomes ever more globally integrated, making it vital that our tax system be consistent with Australia’s international competitiveness. The need to encompass, within our tax arrangements, the revenue and cost consequences of climate change policies is an additional significant factor making a review of the tax system timely. In undertaking this study, Professor Ergas will consult widely, and host a Conference to advance our understanding of the strengths, weaknesses and opportunities for reform of the tax system. Professor Ergas has a distinguished career as an economist both within Australia and overseas and will bring a great deal of economic expertise and experience to this important project.  (His biography appears below.) I have asked Professor Ergas to submit a final report of the Review later in the year.   Contact: Brad Burke – 0447 463 161 HENRY ERGAS Henry Ergas is the Chairman of Concept Economics, an economics consultancy firm with offices in Canberra and Sydney. He is also an external Professor in the Faculty of Economics at Monash University, Melbourne and an Adjunct Professor in the Department of Economics at the National University of Singapore. Henry worked as an economist at the OECD from the late 1970’s to the early 1990’s. At the OECD, he was responsible for a wide range of reports, including a major study on Structural Adjustment and Economic Performance (1987), which presented a comprehensive approach to microeconomic reform. During his time at the OECD, he taught economics at the Ecole Nationale de la Statistique et de l’Administration Economique in Paris and was a Fellow of the Centre for European Policy Studies in Brussels. After leaving the OECD, he taught at the Kennedy School of Government at Harvard University and at the University of Auckland, served as a consultant to the World Bank and the RAND Corporation, and was Visiting Economic Advisor to the Trade Practices Commission before establishing his own economic consultancy in 1997. Terms of Reference Ergas Review of Australia’s taxation system Outcomes: The Ergas Review will report on the state of taxation in Australia at all levels of Government.  It will also outline the scope for reform, including practical approaches to tax reform to enable a fairer and more efficient tax system that enhances the prosperity and living standards of Australians. The objectives to be pursued are: To improve the efficiency and efficacy of the tax system as a whole; To reduce the burden of taxation generally; and To promote productivity growth and the international competitiveness of the Australian economy, so as to improve the living standards of all Australians.   The Review will involve all aspects of the tax system that are amenable to reform in the national interest. This will involve an examination of taxation: At the Commonwealth level, including but not limited to: income tax, company tax, dividend imputation, the goods and services tax, international tax, excises and customs duties, fringe benefits tax, revenue from any emissions trading scheme, capital gains tax, superannuation taxes, and resource rent tax; and At the State and Local level, including but not limited to: transactions taxes, payroll taxes, property taxes, and gambling taxes. In conducting the Review, Professor Ergas will consult widely, including through the release of public discussion papers and a tax reform conference.  The Review will be completed by the end of 2008.   adminTue, 08 Apr 2008 02:44:00 GMTf1397696-738c-4295-afcd-943feb885714:68http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/69/Labor-leads-in-Chutzpah-Copies-Coalition-tax-cuts-and-claims-credit.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=85&ModuleID=403&ArticleID=69http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=69&PortalID=0&TabID=85http://archive.malcolmturnbull.com.au/FAQs/tabid/85/articleType/ArticleView/articleId/69/Labor-leads-in-Chutzpah-Copies-Coalition-tax-cuts-and-claims-credit.aspx Wayne Swan has been claiming credit for this year's tax cuts as a great example of Labor's concern for the battlers. Yet in truth not only are the tax cuts this year a photocopy of the Coalition's election tax policy, but over the last three years the amount of net income tax paid by an Australian earning $30,000 has fallen by nearly 45 per cent.  And the amount of net tax paid by a person earning $15,000 has decreased by nearly 54 per cent.  Recent figures from the Australian Tax Office show that the top 25 per cent of taxpayers pay 65 per cent of the income tax revenue, whereas the bottom 25 per cent of taxpayers account for just 2.7 per cent of the revenue – down from 3.5 per cent of total revenue in 1996.  The fact is that the Coalition’s tax cuts of 2003, 2004, 2005, 2006 and 2007 provided significant tax relief, particularly for low and middle income earners.  Labor opposed the tax cuts associated with the GST and also the tax cuts of 2005, which cut the 17 per cent marginal tax rate to 15 per cent. In 2005 they also rejected measures that provided tax relief for seniors and improved the international competitiveness of our tax system.  Low income earners and seniors have not only benefited from these tax cuts. They have also enjoyed substantial gains as a result of Australia’s recent high rates of economic growth. Research by Roger Wilkins and Mark Wooden at the University of Melbourne shows that between 2001 and 2006, median real incomes of the lowest 40 per cent increased by more than 10 per cent. Over the same period, incomes of the lowest ten per cent increased by nearly 30 per cent – the biggest relative improvement of any group. The Coalition has always believed that the best way to help an unemployed person is to give them a job. The same research shows that employment rates among persistently poor households roughly doubled over this period.    More Australians are in work than ever before, and the current unemployment rate of 4 per is close to a 35 year low. Average real wages have increased by more than 21 per cent since 1996, whereas they fell the last time Labor was in office.  And yet on Saturday, knowing all of this, the Treasurer had the gall to claim that “for too long under the Liberal Party, low and middle income earners missed out on genuine relief.” Really? Does Mr Swan think that taxpayers have not genuinely welcomed the last five years’ worth of tax cuts? Does he think that almost halving the amount of net tax paid by a person on $25,000 over the last five years does not constitute genuine relief?  Of course, more can always be done. The Coalition has always recognised that good economic management, providing income tax relief and improving our tax system is like painting the Harbour Bridge – the task is never complete. That is why we cut income taxes in each of the last five years and announced further income tax cuts during the 2007 election campaign.  That plan, which was announced by John Howard and Peter Costello on October 15 last year, provided tax relief for all Australian taxpayers. It specifically targeted low income earners and seniors, just as many of our earlier tax cuts had.  Under the Coalition’s policy, Australians earning $15,000 or less will not pay any net tax by 2009, and those earning $30,000 will pay $2,100 in net tax by 2010, down from $5,172 in 2004.  You would think that if Labor really believed that the Coalition had neglected low and middle income earners and was serious about providing “new leadership”, they would have developed their own tax policy. Right?  Wrong. When it comes to income tax cuts, Labor is a policy free zone. After 4284 days in opposition, they could not come up with a single new idea on income tax policy.  Instead, Mr Rudd and Mr Swan copied the Coalition’s campaign tax policy for seniors and low and middle income earners. When they introduced the policy into Parliament on 14 February, they claimed that the tax cuts were their idea all along.  Less than a week earlier Mr Swan ruled out further income tax cuts for low and middle income earners, saying that Labor would instead be “banking any upward revisions to revenue, if they occur.”  Most disturbingly, Labor has yet to unequivocally rule out introducing new taxes or increasing existing taxes in the upcoming Budget.  In a nutshell, the Rudd government’s grand plan for genuine tax relief for low and middle income earners is that there will be no further income tax cuts, other than those proposed by the Coalition.  So much for “new leadership”. adminWed, 02 Apr 2008 02:47:00 GMTf1397696-738c-4295-afcd-943feb885714:69