Thursday, 27 May 2010

Prolonging the agony

Perhaps the Labor Party should keep away from Ross Garnaut for a while. The Party’s economic thinker of choice has a tendency to come up with plans that are complex to explain — like the emissions trading scheme and the resource rental tax — and complexity clearly is a difficult thing for politicians to handle. Not that the politicians make things easier when they start meddling with the purity of an economist’s  idea and start tossing in compromises for this pressure group or that.
The fate of emissions trading showed us that with the Government ending up with a scheme that pleased no one and was eventually put where the electoral strategists hope it is out of sight and hopefully out of the electorate’s mind. Now Labor is having similar difficulties in handling the mining super profits tax or resource rental tax or whatever it wants to call it.
Surely Treasurer Wayne Swan and Prime Minister Kevin Rudd are not surprised by the reaction to their proposal. Groups hit with a tax increase always scream. Presumably the pair and their small coterie of ministerial colleagues in the inner circle believed they could sell benefits from hitting miners that outweighed any electoral cost. The problem, then, comes in the salesmanship with the biggest mistake probably being too cute in specifying what the extra revenue gained would be spent on.
Lowering company tax rates has no appeal at all to most voters and goodness knows what this infrastructure stuff means to a couple struggling out in Blacktown. No kudos either for telling me I will be paying less tax on my savings bank interest when I don’t have any money in the account. And as for a few extra per cent at some time in the future in a superannuation account well most people are less concerned about the better future than the better now.
The best message is the simple one. When it comes to tax would you rather the mining companies paid or you paid? Toss in, by all means, the argument that the Government has at last started to use that the resource dug up by miners is not theirs but ours.
But don’t confuse things by getting into an argument about actual tax rates by different kinds of companies and certainly stop giving the impression that you are open to any substantial compromise. That kind of talk is just making the Government look like it doesn’t know what it is doing.
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