Extract from article in The Weekend Australian Sept 5th 1998
Business Section Pages 51-52.
By Terry McCrann
There are none so blind as those that won’t open their minds to discussion of the issues. On that basis, you would have to conclude, today’s growth businesses must be metaphorical white canes and labradors.
Two things prompt this thought, starting with the reaction to Pauline Hanson’s 2 per cent so-called Easytax…..
This, though, is very different from ridiculing it so patronisingly, as if it is intrinsically dumb – like for instance arguing you can build 50-storey office blocks without foundations.
The prime culprit is Peter Costello, who has assailed it as one of the silliest proposals he has ever heard. Rather deliciously, he fails to understand that it actually isn’t all that different to a GST.
Costello said on Thursday: "Apparently, every time a transaction occurs, you tax it at 2 per cent." Then he added: If there were 100 stages in manufacturing a car, you would be taxed at 100 times 2 per cent.
Well, Peter, that is also exactly what happens with your GST. So if there really were 100 stages in manufacturing a car, your GST – at 10 per cent, as against Pauline’s 2 per cent – would apply 100 times.
Ah, might be the response, but a GST only taxes the added value at each stage; Pauline’s tax would apply to the total price at each stage. True, but if we take a more realistic situation where there might be six stages, with Pauline we would end up with a 12 per cent effective tax on the final price. And in practice that would not be terribly different to Peter’s 10 per cent effect tax on the final price…
We saw a similarly patronisingly hysterical reaction to the earlier off-the-cuff remark from one of Pauline’s "gang of three", David Ettridge, about printing money to finance a rural bank.
Now if Ettridge had been talking about printing say $100,000 for every Australian to pick up next time they dropped in to their neighbourhood bank, yes that would have been beyond loopy.
In fact he was talking about "printing" $150 million to provide the bank with its capital base. Although clearly he had little idea of what he was talking about, there is not the slightest thing outrageous about that.
Governments "print money" every day. They do so literally – last year the Reserve Bank printed $69 Billion of new notes, although only $1.6 billion net after cancelling old notes.
More importantly, though, they print money in an economic sense by running a budget deficit. In the Keating years we printed $70 billion worth, and even young Peter printed $4.9 billion in his apprentice year as Treasurer.
In fact the Ettridge $150 million would be just another item in the $140,000 million Peter proposes to spend this year.
The real issues are whether the mix of spending makes sense, the mix of taxes to fund most of them, and how much will be funded sensibly by "printing money" if you have a deficit.
None of this is to suggest either "idea" has any merit (what else would Terry say? Ed.), but to caution against the pompous ridicule which is self-defeating.
Why do we have Pauline and 23 per cent of Queensland voting for her? Precisely because of the patronising attitude of the elites that "we know best" and "you are just too unsophisticated"…..