Lindsay David – Author Print: The Central Bankers Bubble
Though Australian government debt remains quite low (38% of GDP), The Australian government is trying to find ways to boost revenue to cover the ever increasing costs spent.
I do not personally believe we have a federal ‘budget emergency’ today ($37billion deficit is manageable for the time being), if the government of today firmly believes a budget emergency exists, there are a few handy interim solutions at their disposal before considering an across the board rise in the GST.
In the name of promoting an ideas boom (and cause-effect doesn’t exist), here are some possible interim solutions to solving the budget emergency we don’t have– and a little bit more.
- Increase the fuel excise.
Australia consumes ballpark 1.1 million barrels (168 million liters) of oil per day. A very large proportion of this oil consumed is subject to the fuel excise.
Now the cost of fuel has collapsed at both at the wholesale and retail level and backed due to a global oversupply of oil. So whilst the cost of fuel is low, there is room to add an interim increase to the fuel excise.
Minus the ballpark sum (20% of supply) of oil that is utilized excise free or at a deep excise discount, each cent increase in fuel excise would increase government revenue by roughly $1.2 million per day.
Jack up a temporary fuel excise by 30c over a 12 months period so we are all paying what we used to pay for fuel, government would earn an extra $13 billion in revenue.
This temporary fuel tax would also breathe a significant sigh of relief for the RBA which is concerned about low inflation and the multi-billion dollar impact to Australian GDP that low oil brings.
If an interim 30c added fuel excise was implemented over the next twelve months, the budget deficit would fall from $37billion to $25billion
- A temporary Bank super tax
Believe me when I say this tax would be temporary because there is a good chance the Big Four banks will not be making the same profits they are used to making coming into 2017. But in the meantime, if the big four banks earn the $30billion combined they did in 2015, surely there is room there to tax these financial institutions before the housing market goes bust.
Lets say government was able to extract ballpark an extra 33% of the profits of these ‘too big to fail and too big to save without nationalizing’ banks, government would clock up an extra $10 billion in revenue. Surely that’s the least these banks could be taxed considering taxpayers are the ones who guarantee these banks.
Budget deficit now
Original $37 billion forecast deficit minus interim fuel excise and bank super tax brings the total deficit down to $15 billion.
3. A temporary land tax on negatively geared properties
There are more than 1.2 million properties in Australia that are essentially an annual tax write-off costing government $billions. To cover the loss of government revenue a $2500 per year land tax per negatively geared property would generate an extra $3billion in revenue for the Australian government.
The other benefit to this temporary land tax on negatively geared properties is it would most definitely persuade more Aussie investors to invest in innovation which is exactly what the Australian government wants right?
Now we have gone from a $37 billion deficit to a $12 billion (0.8% of gdp) deficit without forcing the Aussie battler who cant afford a car to increase his or her living expense.
Surely there are other resourceful ways for government to increase revenue without slugging consumers an extra 5% across the board whilst solving a few key national problems our society contends with.
- A 300% baby formula export tax
- A 5% ‘budget emergency’ pay deduction for top serving public servants & 20% for central bankers until the income growth rate exceeds inflation.
- Government purchasing HSV Limousines to transport our politicians (like they used to) versus the BMW 7 series they now acquire
- Close down APRA (They haven’t done much since 1998)
- Annual $15 fee per household to help cover the costs of running the ABC
- A 30c tax on each alcoholic beverage served at a restaurant, pub, bar or nightclub.
- A $5 contribution fee for every doctor visit or emergency room visit for any household earning over $40k per year
These temporary solutions are definitely worth government considering whilst our politicians slug it out in the federal chamber about a GST we don’t need to raise and a budget emergency we don’t even have.. And if you believe the jobs data that comes out of the Australian Bureau of Statistics (ABS) suggesting hundreds of thousands of jobs were created throughout 2015 (and the net cost v revenue gain to government from this), there is no reason government cannot produce a balanced budget. But then again, the ABS is producing a lot of ABS data.. when you leave out the ‘A’ in the ABS.