Media Release: Over 1000 Australians Sign Petition To Stop The Levy

MEDIA RELEASE
Over 1,000 Australians Sign Petition Opposing Flood Levy

Over 1,000 Australians have signed an online petition imploring the Federal Government to not impose an unfair and destructive new tax on the vulnerable Australian economy. The website, www.stopthelevy.com, is a project of Menzies House, an independent, grassroots online community for center-right activists, writers, and thinkers. Menzies House is unaffiliated with any political party.

Economists, community groups, and retail organisations from all sides of the political spectrum have condemned this tax proposal, and polling shows it is opposed by the great majority of Australians. This proposal comes on top of other steep tax hikes on tobacco, alcohol, “luxury” goods, at a time where electricity prices in some Australian cities have risen by as much as 20%, and the price of food items such as fruit has skyrocketed by 15% in the December Quarter.

“If enacted, this tax will hurt businesses, hurt families, and seriously harm Queensland’s recovery,” said Menzies House Editor Tim Andrews. “With increasing prices, and less money to spend, this will put even more pressure on already struggling families’ budgets. As consumption will fall, businesses will be forced to cut back on employment, damaging our already vulnerable economy.”

The creators Stop The Levy also expressed their concern about the impact this will have on crowding out charitable donations. Australians have already donated over $100 million to fund the reconstruction, and many feel betrayed at being forced to pay twice.

 “Our house was flooded, and the response from the community was fantastic. Local church groups and a basketball team showed up to help clean up, bringing food & baskets of necessities. Friends and strangers alike have been lending a hand to all around them” said Menzies House Editor John Humphreys, a Queensland based economist. “Having the government come in now and use this disaster as an excuse to bludgeon more money out of hard workers is a betrayal of our great community spirit. This is a slap in the face to all of those volunteers and civil society groups."

Media Enquiries:
Tim Andrews
Email: 
tandrews@menzieshouse.com.au
John Humphreys
Mobile: 0404 044 561 
www.stopthelevy.com

Download as a PDF

 

Reduce Taxes To Rebuild Queensland, Don’t Raise Them

Writing at Economics.org.au, Mac Nichols, and engineer and Mannkal Advisory Council member, makes the following argument:

Forcing prosperous individuals to pay a levy for others misfortunes increases discontent, fosters careless investments, hobbles otherwise profitable enterprises, and smothers necessary capital accumulation.

Should our PM and her supporting Tsars want to help they should immediately remove tax burdens. All investments in economic and privately funded infrastructures like harbours, dams, roads, railways and power generation facilities in flood devastated regions could be state and federal tax free and all profitable returns associated with such investments could also be tax free for 10 or more years with a 50% tax break every year after.

In this manner all Australians can profitably own a share in the effort and the fruits of their investments.

What the flood levy outlines is a tax addicted government that knows no limits to its perceived omnipotence.

Exactly.

(Reproduced with the kind permission of Economics.org.au. Posted by TVA)

Australia’s Deficit Attention Disorder

Labor has again succeeded in pulling the fiscal wool over voters' eyes, writes Milton Von Smith

In all of the hullabaloo over Julia Gillard's flood tax, everyone seems to be ignoring some two very basic issues. 

Let's start with some facts and figures.  Last year's (2009-10) budget deficit was $54.7 billion.  This year's (2010-11) budget deficit is expected to be $41.4 billion.  And next year's (2011-12) deficit is expected to be $12.3 billion. 

That's right: Labor, as you read this, is happily racking up over $100 billion in deficits

But all of the discussion this week around the tax has been about the desirability or otherwise of a surplus in 2012-13. 

Huh?  This just beggars belief.  Why are we even talking about a hypothetical surplus, let alone having a debate about the size of this surplus and the effect of a new flood tax on it? 

The fact is that this government has never run a surplus, and never will.  It is so remote a possibility as to be completely irrelevant for all intents and purposes. 

Arguing over the size of Labor's surplus in 2012-13 is like arguing over whether Peter Garrett rates Milton Friedman or Friedrich Hayek as the better economist.   

Labor's ability to convince the media and the electorate that we should all be debating a hypothetical 2012-13 surplus – whilst continuing to run record deficits – was far and away its crowning political achievement of 2010.  They completely hoodwinked the Australian people and successfully redefined the parameters of the economic debate. 

And they were not helped by the Opposition.  What should have happened is that the Opposition – just as Wayne Swan refused to mention the "deficit" word in his 2009-10 budget speech – should have flat out refused to even mention the "surplus" word, and should instead have drawn people's attention back to the massive deficits that are happening now

But instead they fell right into Swan's trap, choosing to debate the assumptions and forecasts around the hypothetical return to surplus in 2012-13. 

The result is that very few, if any, Australians would know that our deficit this year will be 3 per cent of GDP. 

So that's the first point about this week: it has just been a continuation of Labor's very successful tactic of convincing people to ignore our current fiscal deficits, and focus on other things. 

The second point is related to the first, and it is this: Gillard's flood tax is expected to raise $1.56 billion in 2011-12, and $235 million in 2012-13. 

That's right: the new tax raises virtually no revenue in the year that the government thinks that it will get back to surplus territory. 

Instead, the vast majority of the revenue is raised in 2011-12, when we are still expected to have a massive deficit of $12.3 billion. 

Get it?  The flood tax revenue comes in 2011-12.  But the hypothetical surplus is in 2012-13.  In other words, the flood tax has nothing to do with Labor's hypothetical surplus.  One happens next year; the other is supposed to happen the year after

The revenue that is collected in 2011-12 from the flood tax will have virtually no effect on the budget outcome in 2012-13. 

So all of this talk about needing the tax to get back to surplus is simply complete and utter economic nonsense. It doesn't make any sense at all to talk about the two things together, because they are completely separate issues. 

Which leaves us with the question: why on earth is Gillard introducing the flood tax?  Simple. 

  • First, it allows Labor to again keep talking about a hypothetical surplus in 2012-13, and lets Gillard look like she has chosen the difficult option of introducing a new tax in order to appear economically responsible (which she most certainly is not). 
  • Second, it is designed to make Tony Abbott look bad – rightly or wrongly, voters already think Abbott is too negative, and Labor's polling would be telling them this.  Getting Abbott to oppose any aspect of a flood relief package will just reinforce this perception. 
  • And finally, the tax hits middle and upper income earners i.e. mostly Coalition voters.  Gillard simply wants to punish people who didn't vote for her.  

So there you have it.  This is a tax that is about as purely politically motivated as you will ever see in Australia.  It has nothing to do with the budget, inflation, interest rates, or any other economic issue.  The flood spending could have easily been funded by cuts elsewhere in the Budget – Gillard's cuts proved that. 

The tax revenue arrives in 2011-12, which is a year when we will have a $12.3 billion deficit anyway, and so it will not and cannot affect the 2012-13 budget bottom line. 

In any case, even if the tax was levied in 2012-13, it simply won't raise enough revenue to have any effecton the Budget outcome in that year – by the time 2012-13 comes around, parameter variations and other policy decisions would have swamped its potential influence.  

In summary: we're having a fierce debate about the effect of a new tax on a pie-in-the-sky surplus, even though the tax will raise most of its revenue in the year before we're supposed to get to that pie-in-the-sky surplus; and whilst we're having that debate about a surplus that will never happen (with or without the tax), we're running up $100 billion in deficits! 

If that doesn't constitute deficit attention disorder, I don't know what does. 

Milton Von Smith is the Economics Editor of Menzies House

A tax by any other name

Because politicians know voters don't like tax increases, Julia Gillard won't be imposing a flood tax. Instead, as she announced yesterday, there will be a temporary "levy".

The fact that voters usually oppose higher taxes hasn't stopped the Prime Minister – all that has happened is it has forced her to think of a name for the impost that doesn't have the word "tax" in it. As the radical pamphleteer Thomas Paine noted as long ago as 1776, often when ministers are intent on doing something the public might not like, ministers don't change course, they just find a more clever way of doing it.

"For the fate of Charles the First hath only made kings more subtle – not more just."

It's not because of the floods that we've got a flood tax. It's because of the government's spending profligacy that we're now in the situation that the federal government can't afford the estimated $5.6 billion needed for the reconstruction effort.

via ipa.org.au

(Posted by TVA)

Paying For The Floods

Centre for Independent Studies Senior Fellow Robert Carling discusses the  the Flood Levy:

 The federal government’s proposed flood levy comes just two weeks after the Brisbane River peaked. The kindest thing that can be said about the levy is that it is premature when the cost of the floods can only be guessed. More bluntly, it is a politically opportunistic tax. Despite its beguiling label, the levy is a tax increase like any other tax increase.

The government knows there is a political imperative to act immediately to create a plausible link between the floods and a tax increase. The federal proposal stands in contrast to statements by Brisbane’s Lord Mayor that he will not put a levy on council rates and by the Queensland Treasurer that he will not increase state taxes. There is another way of paying for the floods: cut or defer other government spending. The Gillard government is doing some of this, but only enough to cover two-thirds the estimated cost.

Gillard and Swan stress the need to achieve a budget surplus by 2012–13. This is a political necessity as much as an economic one but in any case, the levy has little to do with 2012–13. It applies for one year, 2011–12, and will raise most of the estimated $1.8 billion in revenue in that year. Likewise, flood-related Commonwealth outlays are one-off, and most of the money will be spent before 2012–13. The levy actually affects 2011–12, when no surplus was promised anyway. The total Commonwealth budget for 2011–12 will be more than $350 billion. Surely, within this envelope, the government can manage the cost of the floods without increasing its revenue by another 0.5%.

The real issue is that even before the floods came along, the Gillard government had to exercise fiscal discipline, which it knew and still knows will be needed to accommodate the resources investment boom. Getting away with any tax increase will make that task easier. This is the true purpose of the flood levy.

There is a track record of opportunistic ‘levies’ imposed by the Howard government, but that doesn’t make them good tax policy. Such levies – usually spuriously linked to popular causes – are a political device to increase taxes while pretending not to, and to, avoid the harder work of curbing government spending. I have written chapter and verse on what is wrong with these levies in CIS Policy Monograph 75, Tax Earmarking – Is It Good Practice?

The flood levy will discourage private donations and many people will see it, rightly or wrongly, as a tax to bail out the uninsured. Gillard and Swan can go on all they like that the levy is only for public infrastructure, but this is jam-jar accounting. A tax dollar is the same as any other.

Instead, the government should shelve this tax increase and concentrate on achieving fiscal discipline by curbing expenditure in the May budget.

Robert Carling is a Senior Fellow at The Centre for Independent Studies.

This post reproduced with the kind permission of the CIS

 

Two Taxes and a Levy

Cory-BernardiSenator Cory Bernardi elucidates the problems with Julia Gillard's flood tax. 

I am worried about our nation.

We are all paying the price for the incompetence and mismanagement of a government that is more interested in sophistry than stature. Unfortunately the price we, and our nation will all pay is only going to rise in the future and the Government is to blame.

They have squandered a hard won multi-billion dollar legacy of 'rainy day' money saved by the previous administration. When the inevitable rains did come, their only solution is to answer impose a brand new Robin Hood tax. The Government may describe it as a levy but that is mere sophistry.

My experience with levies accounts for my dubiousness. In South Australia we have had a 'save the River Murray' levy for many years. Now that the river is saved I am waiting for the announcement that the levy will be repealed. I won't hold my breath!

Nearly a decade ago we also got an emergency services levy to pay for a communications network that was hopelessly over budget and didn't actually work properly. We are still paying. 

Last week there was even a suggestion of a rainfall levy to stop the unscrupulous householder from filling their rainwater tanks for free. 

Now we have a Federal flood tax. Not necessary but demanded only because the Government has wasted billions of dollars on handouts, pink batts, non-essential school halls, a new nationalised telephone network and mollycoddling illegal boat arrivals.

Of course, the tax doesn't apply to us all. Anyone affected by the floods escapes. Just what definition will apply to ‘affected’ will be interesting to see but I have no doubt that it will provide another opportunity for the rorters to take advantage of an incompetent Government’s lack of administrative ability. 

It also won't apply to those earning less than $50,000 per annum, making a mockery of the focus group message that 'we are all in this together', repeated incessantly from the most frozen Prime Minister in living memory. 

So many Australians have already dug deep and donated time, money and goods for the relief of flood victims. Many of these individuals will now be forced to give again through the extra tax. Some will not begrudge the additional impost but many, myself included, will think twice before giving spontaneously to another appeal lest we be forced by the Government to give again.

Others will rightly question why we are making $500 million dollar donations to Indonesia for schools (who gave us $1 million back for flood relief), building homes for failed asylum seekers in Afghanistan and opening an expensive embassy in Ethiopia when we have pressing needs at home.

There are so many areas where the Government could save money through cutting unneccessary and wasteful programs. The most obvious is to dump the white elephant known as the NBN but there are many more.

However, rather than trim the cloth to fit the purse, the neuvo-socialist approach is to reach deeper into the pocket of the people. This latest grab is only the first of the planned taxes that will hit many people already struggling to cope with the cost of living.

There are plans for a mining tax that will affect employment and investment in the mining sector. Then there is the carbon tax that will make electricity prices leap by more than 50 per cent and increase the price of virtually everything.

That's why I am worried about the path ahead. It is built around bigger government spending and greater government taxing. Neither of them are good for our country.

The Prime Minister, who has looked hopelessly out of her depth even before rain began to fill the streets, is now charging the Australian people for her own incompetence. Unfortunately, we can't afford it any more.

Register your opposition to this wasteful levy by going to www.stopthelevy.com

Senator Cory Bernardi is the Shadow Parliamentary Secretary Assisting the Leader of the Opposition and a Senator for South Australia. This article is courtesy of his personal blog which can be found at http://www.corybernardi.com.

Are publicly-funded school chaplains unlawful in Australia?

The High Court of Australia yesterday agreed to consider the lawfulness of the Howard Government's school chaplain program.

The Herald Sun reports that:

Ron Williams journeyed from Toowoomba to Sydney yesterday for a directions hearing in his challenge and was thrilled to hear that his case could be heard in the High Court over three days in May.

"This is a very important moment," a jubilant Mr Williams said yesterday.

The father of six, who has four children attending Queensland public schools, said his main argument was that the funding for chaplains in schools breached Section 116 of the Australian Constitution, which states that the "Commonwealth not legislate in respect of religion".

"This is not about getting chaplains out of schools, it's about the government funding them, which I believe is against the Constitution," he said.

A couple of quick points about this case:

  • One of the few freedoms guaranteed in the Commonwealth Constitution is freedom of religion (s 116).  
  • The provision in the Commonwealth Constitution has four parts, namely, that no law:
    • may establish any religion;
    • impose any religious observance;
    • prohibit the free exercise of religion; and
    • no religious test shall be required as a qualification for any officer of the Commonwealth.  
  • The case has been granted 'special leave to appeal' which means that the Court believes there is a question of public importance or it is in the interests of justice to do so.  This does not mean that Mr Williams has won his case.  This does mean that there is at least one judge who wants to revisit the law in this area.  
  • One of the leading cases concerning the first part of s 116, Attorney-General (Victoria) ex rel Black v Commonwealth (1981) 146 CLR 559 (known as the DOGS case amongst lawyers) concerned the Commonwealth Parliament enacting a series of acts providing for the payment of financial assistance to each state on condition that the moneys were paid to non-government schools nominated by the Commonwealth.  In that case, the majority dismissed the case on the basis that the provision of financial support in this way did not ‘establish’ a state religion.
  • I am unsure how Mr Williams is structuring the Chaplaincy case.  However, my 'googling' suggests Mr Williams is running it as follows:

(a) That the Commonwealth lacked executive power to enter into the Funding Agreement at his children’s school and as a consequence, that agreement was invalid or void;

(b) The Commonwealth lacked executive power to enter into the agreement for the provision of funding for chaplaincy services at the school;

(c) The Commonwealth could and cannot validly authorise the drawing of funds from consolidated revenue for the purposes of the funding agreement and the chaplaincy services;

(d) That in the circumstances, any chaplain retained under the funding assistance given by the Commonwealth holds office under the Commonwealth and within the meaning of Section 116 of the Constitution;

(e) By requiring school chaplains engaged at the school to comply with the stipulation set out in the NSCP Guidelines, the Commonwealth is imposing a religious test as a qualification for office under the Commonwealth in contravention of Section 116 of the Constitution;

(f) That the qualification stipulation in the agreement is void and of no effect.

If the case is successful, could the same reasoning be applied to, for example, religious organisations that run job or social services? (e.g. in order to be a Salvo, one needs to accept its particular brand of Christianity).

Suffice it to say, watch this space.  

UPDATE: The guidelines specifying who can be a chaplain are available here. 

(JS)

Our New Website: Stop The Levy

Levy Logo
Menzies House is proud to announce our newest project: Stop The Levy! 

Just a few minutes ago, Menzies House launched our first subsidiary website – Stop The Levy! 

This new website, created in response to Julia Gillard's unfair great new tax, will be a portal to provide activists with information about this tax, and hosts an online petition which I strongly encourage everyone to sign, so we can show our politicians that Australians really can not afford this great new tax.

Now, I'll admit the website design is rather rudimentary still. It was hastily done, and, with our Editor in Chief and design guru Chris Browne out of contact somewhere in South America, it fell on Tim Andrews to create. And Tim Andrews really, really, really lacks both design and development skills. So, we certainly recognise it still looks rather bad, but nonetheless, it is a great  cause, and we strongly encourage you to check it out and SIGN THE PETITION

Also, please promote Stop The Levy on Twitter, and "like" it on Facebook – as well as promote it to all your friends! Also, we plan to start running online advertising promoting the site soon, so, if you can spare a few dollars for a good cause, please donate here: every cent will go on spreading the good word!  

We have written before about how this tax will kill jobs, slow economic growth, and hurt families. So, check out the site, sign the petition, and send a clear message to Canberra: Australia Just Can't Afford This Great New Tax! 

UPDATE: Fixed broken links. Sorry!

(Posted by TVA)

The Coalition’s New Economic Plan for Australia: Low Quality Goods, More Natural Disasters and Higher Government Spending, and Higher Prices

The Coalition urgently needs to lift its economic game, writes Milton Von Smith

As regular readers will know, I am always the first in line to give Labor a good whacking for their truly crazy and destructive economic ideas. 

And I am not in the habit of breaking the Eleventh Commandment.  But I think that you will agree that his has been a particularly bad week for sensible economics in this country.  And I'm afraid to say that the Coalition has made a sizeable contribution to this outcome. In fact, the Coalition has scored the trifecta this week – the trifecta of truly atrocious economic ideas, that is.

They have been so bad that they are making Wayne Swan look like an economic genius, instead of the dunce that we – and Swan – know that he really is. 

And all of this in the same week that Labor will apparently announce another GBNT (Great Big New Tax).  So none of this is good politics either. 

It all started out with Barnaby Joyce telling us that we should all buy low quality, flood-damaged produce from Australian farmers instead of higher quality, cheaper imported fruit and vegetables.  Never mind that we don't like low quality produce because it – ahem – sucks

No, Joyce is worried that if we consume more imports, we would encourage a "long-term alternate supply source to that of Australian produce." 

Excuse me, but isn't that exactly what we should be encouraging? 

First of all, higher quality, cheaper imports are, you know, cheaper and better.  That's reason enough in my book. 

But shouldn't we also not discourage the development of alternate supplies from other countries so that when drought and flooding rains occur again (as they inevitably will), we won't all starve to death? 

Curiously, Joyce wasn't worried about the possibility that by telling Australians to buy low quality domestically produced goods, he was encouraging a "long-term alternate supply source" to high quality Australian produce. 

You see, if it turns out that thanks to Barnaby Joyce, our farmers and grocery retailers can get away with selling damaged goods at higher prices, what is to stop them doing that forever?  That problem will take care of itself, no doubt. 

Joyce's piece of economic lunacy was quickly followed by Joe "I have a 9 point plan to wreck the Australian banking system, the details of which nobody can remember except for the fact that it was completely silly" Hockey, who chimed in with his explanation of how the reconstruction from the flood disaster would boost jobs. 

Hockey's view is classic voodoo economics, and is exactly the kind of thinking that has led to Australia's current problems with government overspending.

He objects to Tim Andrews' claim that Hockey has invoked the broken window fallacy – but Hockey's own explanation provides two perfect examples of that fallacy in action!

Example 1: Hockey seems to think before the floods there were a whole bunch of  resources just sitting around doing nothing – particularly in the banking and insurance sectors.  Apparently those idle funds will now be "injected" into the economy. 

But this is complete and utter economic nonsense.  Before the floods, those funds were being put to productive uses elsewhere in the economy, creating employment and economic wealth.  Now they'll be put to less productive uses – replacing things that have been destroyed by the floods. SImply put, the jobs that would otherwise have been created, won't be. 

Now that doesn't mean that those funds shouldn't be deployed – if insurance companies have a contractual obligation to pay out claims, then that is of course what they should do.  But nobody – least of all the alternative Treasurer of Australia – should be claiming that the aftermath of a flood or any other natural disaster will "create new jobs". 

If that was true, why on earth would Hockey support an emissions trading scheme?  On Hockey's flawed reasoning, if global warming is going to increase the number of weather-related natural disasters, then won't that create jobs, and therefore be A Very Good Thing?  

Example 2: The same reasoning applies to Hockey's bogus claims about the effects of a "net injection of funds from governments", which he says will also create jobs.  Where does Hockey think this "net injection" will come from?  Santa Claus?  No, it will come from taxpayers.  The money taxpayers would have spent or saved and which would have been used to create jobs and economic wealth in productive activities wil now be diverted, via taxes, to less productive activities. 

Again, the jobs and economic value that would otherwise have been created, will not be. Of course, Hockey is right that the priority should be not to have another GBNT – but even if that didn't happen, the spending would still be funded by GBETs (Great Big Existing Taxes), and would therefore would still be diverted from other more productive areas of the economy, reducing jobs elsewhere. 

And finally today we had John Cobb calling for milk prices to be higher.  Yes, you read that right.  Cobb even wants the ACCC to investigate the major grocery retailers for cutting their prices!  Can you believe it? 

So I tell you what, I am fed up with the Coalition this week. They need to lift their game, and fast. As far as I can tell, their new Three Point Plan for Improving Australia's Economic Prosperity seems to be:

  1. Consumers should buy more low quality goods instead of cheaper, better imports, because that might encourage imports and that is A Bad Thing;
  2. We should have more natural disasters and more government spending because they are job creators.  They put to use those otherwise idle resources which have zero opportunity cost, and magically "inject" funds into the economy; and
  3. We need to increase consumer prices for basic staple items. 

I don't know about you, but it seems to me that as far as plans go, this one could use a bit more work. 

Milton Von Smith is the Economics Editor of Menzies House