Sunday, July 17, 2011

Wow. "Unpopular" tax reform with a hung parliament

One thing that tends to characterise hung parliaments or even non-traditional coalitions in most countries is their ability to only pass popular spending sprees and not the unpopular new taxes (or more correctly, tax reform) that are possible with clear parliamentary majorities.

This is clearly not the case in Australia. Whether for or against a Carbon tax, one has to admit that it is bold, given the popular opinion of the moment.

The thing is, that the idea is to reduce CO2 at the *lowest* cost, which is still putatively an aspiration of a reduced majority. The Europeans have active policies that don't work, and the US has failed to pass legislation that wouldn't work anyway.

7 comments:

Dr Clam said...

See, that's what I wanted a hung parliament for, so they wouldn't be game to do anything and wouldn't introduce any more red-tape to brutalise everyone and push mild-mannered public sector employees one step closer to becoming full-time propagandists for the abolition of representative democracy in favour of rule by giant robots. More fool me. :(

I have probably made this suggestion before, but while they are on a roll with unpopular legislation, why not a bill to reintroduce whaling? This would prove once and for all that the PM is not a puppet for the Greens. It's an industry where we were once world leaders and we can be again. ///prepares to dial Tony Windsor///

Marco said...

I have had a look at the legislation, and have decided that the "red tape", you are talking about is a pretty lame argument. The amount of red tape associated with the "Carbon Tax" portion of the new legislation is less than what it is for say, volumetric alcohol taxes, which is, in itself, a tiny portion of the tax code.

I believe that you have the beliefs that you do regarding the Carbon tax because the right wing politicians that you trust (ie. Tony Abbott et al) are actively campaigning against it. Please say it isn't so, and tell me where your views contradict his based your own idea space, and why you think democracy is at stake.

If there is indeed any red tape to speak of, it is all in the "compensation" side of the leger, which is entirely democracy driven.

I will completely back you up on the whaling thing, and with any luck, the greens may be punished in the ballot box for pushing the climate change agenda so far.

Dr Clam said...

1) All new legislation involves the creation of new forms and new bureaucrats, increasing the burdens on all productive sectors. Thus, new legislation should only be brought in if old legislation is simultaneously repealed.

2) You are correct: the vast majority of the complexity is on the compensation side. This merely compounds the evil. All compensation reduces the utility of the tax in meeting its stated objectives. There should be *no* compensation.

3) As you are very well aware, my position is: do NOTHING. This is why I am against the tax. I think Tony Abbot's 'direct action plan' is a random string of populist slogans and I would hate to see it implemented. I am betting that by the next election Brussels will be on fire, Bachmann will be in the White House, the RMP construction bubble will be bursting, and the idea of wasting *any* money on AGW will be seen as the self-indulgent irrational sentimental twaddle it is.

4) Democracy is at stake only because I am jack of it. I am googling 'how do u build giant robot with lazereyes' as we speak.

Dr Clam said...

Parenthetically, I *thought* you would be hanging out checking your post for comments today ;)

Marco said...

Yes. I think that Europe will implode, and that the US will reinvent itself. Is that me agreeing with you?

I differ from even my own previous predictions about the RMP. I do think the RMP may toy with the idea of a debt equity swap with say Greece (ie. we will pay all of your debts including interest if you give us your country), but I think Greece will opt for an Argentinian style hell rather than that.

I think that the RMP will eventually be caught up in the ensuing maelstrom, but I am not at all convinced that it will be in the form of a property value collapse.

I think that Australia will react to this possibity by going ahead with the Carbon tax, but cancelling all compensations on the grounds that we cannot afford them.

Dr Clam said...

I think that Australia will react to this possibity by going ahead with the Carbon tax, but cancelling all compensations on the grounds that we cannot afford them.

Oh yes! That sounds very plausible indeed. If the government sees out its full term that's what will happen, I reckon.

Yes. I think that Europe will implode, and that the US will reinvent itself. Is that me agreeing with you?

Indeed it is!

I think that the RMP will eventually be caught up in the ensuing maelstrom, but I am not at all convinced that it will be in the form of a property value collapse.

I don't really know either. It has kept mushrooming about two years longer than I thought it would now, so I am not much of a predictor. I still think a property bubble collapse is the most likely manifestation, but the place is sui generis. There has never been such a big economy with such strong controls on internal capital and labour mobility... the most important things are happening out in the countryside where there are no reporters, and who can trust any of their economic numbers?

Anyway, I will reiterate my Olympiconumerological prediction for regime change in 2017.

And putting on record here, just in case it comes to pass, that I saw a Broncos/Roosters NRL final in a dream.

Marco said...

It appears we agree a lot more than at first.

I believe that a flat carbon tax brings us closest to MY ideal of "doing nothing". A Government's primary job is to raise taxes "plucking the goose with the least amount of hissing".

To me it "does nothing" in the sense that taxing things is passive. It is completely up to individual freedom whether we absorb the cost or change our behaviour. It is those pesky subsidies etc. that brings the world further away from looking like my "do nothing" utopia. The input tariffs put up prizes for investing in a way which suits the regulatory framework, and punishes other people (taxpayers) who have to put in for these prizes. It's action dystopia.

The compensation to the tax just throws some money around indiscriminately to a wide swathe perceived "needy" just like every government does to justify its existence. Pretty harmless and amounts to a stimulus because those people tend not to save those bonuses, unlike solar subsidy recipients.