The Price....or Cost...of a Cwlth Surplus

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The Price....or Cost...of a Cwlth Surplus

Postby Squawk » Tue Nov 29, 2011 12:16 pm

Well, Federal Labor must by now officially have all its eggs in one basket. A return to a surplus.

They have spent the past 4 years redistributing wealth, applying tax increases and imposing levies (floods), excise (tobacco and alcopops) and thresholds ($150k for singles, couples and families) and notwithstanding the $16bn surplus they inherited and the impact of the GFC, they still cant get there....not at least without circling the wagons, lassoing the horses and shuffling the deck chairs at every possible opportunity to ensure they do it.

Their political credibility is apparently all based on getting to a surplus position. Yet at what cost?

Even SA's new Premier has said he is not wedded to keeping a AAA credit rating if it compromises the future priorities of the state or its communities. Yet Federal Labor is now seemingly wedded to a surplus at all costs, no matter what the cost. If the GFC has been that bad, and Australia has weathered it better than (almost) any other country in the world, then why dont they just defer the surplus projection? Surely that would be in the National interest, not solely just the political interest?

The latest announcements today are as follows:

http://www.smartcompany.com.au/tax/20111129-wayne-swan-s-surplus-saving-mini-budget-10-key-points.html

Tax measures already announced/implemented include

1. Alcopops tax.

2. New tax on Australians working overseas.

3. Cutting what Australians can put into superannuation tax-free.

4. Restrictions on business losses.

5. Changes to Employee Share Scheme.

6. Cigarette tax hike of 25%.

7. The Mining tax.

8. Ethanol taxation increases.

9. LPG excise increase.

10. Tightening restrictions on medical expenses before you can claim them on tax.

11. Increase in luxury car tax.

12. Flood Levy (tax).

13. Tax increase on company cars.

14. Abolition of Entrepreneurs’ Tax Offset.

15. Phasing out of Dependent Spouse Tax Offset.

16. Disallowance of deductions against government assistance payments.

17. Removing minors’ eligibility for the low income tax offset on unearned income.

18. Deferral of Tax Breaks for Green Buildings.

19. Carbon tax.

20. Tobacco Excise increased

I haven't bothered to detail all the $150k threshold items, nor have I factored in the likely abolition of the health insurance rebate.

If the total tax take for Govt has gone down, then surely that reflects that people and businesses are not making as much in gross terms. Yet the solution to get a surplus is to tax them even more - to the sole benefit of the current govt? This has a ring of the Sheriff of Nottingham about it...
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Re: The Price....or Cost...of a Cwlth Surplus

Postby redandblack » Tue Nov 29, 2011 12:21 pm

Interesting post and a good question about a surplus, S.

I agree with many of the actions taken in your list. I'm very familiar with the effect of a lot of them and several close off loopholes taken advantage of by the wealthier sections of the community.

As for 'redistributing wealth', all governments since Federation redistribute wealth. Almost every tax law change does that.

The net effect of wealth redistribution over the years has favoured the wealthy at the expense of the rest.
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Re: The Price....or Cost...of a Cwlth Surplus

Postby redandblack » Tue Nov 29, 2011 12:25 pm

The question of the reduced tax take is mainly due to Capital Gains on share transactions.

When prices are down, due mainly to Europe, share sales are at a loss or small profit. Losses can be carried forward against future profits, which means that the tax take from this is significantly reduced.

Unemployment is steady, so the tax take from salaries is probably also steady. Business profits are up, so ditto.
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Jimmy_041 » Tue Nov 29, 2011 12:46 pm

Interesting one:

Super co-contribution wound back: The Government will save about $1 billion over the next four years by reducing co-contributions on superannuation and better targeting the contributions it does make towards low income earners.

Reducing co-contributions!
Better targeting? They only pay it after you've put in your tax return and established your annual income

I agree with you on this one R&B - it will only hurt the lower income earners
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Q. » Tue Nov 29, 2011 6:32 pm

The public needs to drop the obsession with the notion of needing a budget surplus.

Apparently we have a AAA credit rating now: http://www.reuters.com/article/2011/11/28/markets-ratings-australia-idUSWNA454520111128
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Sojourner » Tue Nov 29, 2011 9:35 pm

Quichey wrote:The public needs to drop the obsession with the notion of needing a budget surplus.

Apparently we have a AAA credit rating now: http://www.reuters.com/article/2011/11/28/markets-ratings-australia-idUSWNA454520111128


Have to agree with you there, debt can be a good thing, especially if its to create jobs an infrastructure as it was with the Snowy Mountains Scheme. We should be doing a similar thing with a high speed rail link up the east coast of Australia, yes it would be expensive to build, yet it would also put many people into work as well as the knock on effect for jobs. BHP steel would be one firm that would likely do pretty well, concrete companies another and so on.
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Jimmy_041 » Wed Nov 30, 2011 2:32 pm

Jimmy_041 wrote:Interesting one:

Super co-contribution wound back: The Government will save about $1 billion over the next four years by reducing co-contributions on superannuation and better targeting the contributions it does make towards low income earners.

Reducing co-contributions!
Better targeting? They only pay it after you've put in your tax return and established your annual income

I agree with you on this one R&B - it will only hurt the lower income earners


Super stuff-up resolved
KEVIN NAUGHTON : INSIGHT

CREDIT where credit is due, we say here at Indaily.

So it’s a well done to assistant federal treasurer Bill Shorten for fixing a problem we raised back in July.

Tucked away in the announcements attached to yesterday’s Mid Year Economic and Fiscal Outlook was as announcement to streamline the Low Income Superannuation Contribution to remove the burden of extra paperwork.

The statement read: “Rather than requiring eligible workers to fill out a tax return or other type of form, the Australian Taxation Office (ATO) will verify an individual’s income using available data. This change will help low-income Australians who do not have to lodge tax returns, but qualify for assistance to boost their superannuation savings.”

That all sounds very complex, but here’s how a story that benefits 100,000 low income earners unfolded.

In May 2010 the Government announced it would repay low-income earners the 15 per cent tax paid on their super. To claim the $500 rebate, low income earners had to lodge Income Tax Returns.

In July this year, Treasurer Wayne Swan announced a raft of softeners to go with the carbon tax including a lift in the tax-free threshold so that “another million people are removed from the tax system altogether”.

Indaily contacted Swan’s office to ask how low income earners could claim a rebate when they no longer lodged tax returns.

After a series of pauses, gasps and WTFs, we were eventually referred to assistant treasurer Bill Shorten.

I remember a panicked adviser saying, “it was probably the third floor of Treasury not talking to the fifth floor”.

We then spoke to a local expert who confirmed our view that there had been a stuff-up.

Accounting firm BDO Australia’s Adelaide-based superannuation advisor Shirley Schaefer said the rebate and the co-contribution scheme would be unworkable under the carbon tax changes.

“Both of these incentives rely on the lodgment of an income tax return by the individuals, so that the ATO can match an individual’s taxable income and contribution level to determine the incentives,” she said.

“Without lodging the income tax return it would appear that the ATO will not match the relevant data for both of these incentives and as such will save the government much money in the non-payment of the incentives.”

Finally, Shorten’s people responded officially with this statement:

“The Government is aware of the implications for the clean energy future package on other policy areas like the Low Income Earners Government Superannuation Contribution. As a result, Treasury is exploring ways to avoid the need for people to lodge a return solely to claim the government contribution. Further details will be announced in due course.”

And so it came to pass last night that the Feds released a statement low income superannuation contribution (LISC) to make tax concessions for compulsory superannuation contributions fairer.

“Rather than requiring eligible workers to fill out a tax return or other type of form, the Australian Taxation Office (ATO) will verify an individual’s income using available data.

“This change will help low-income Australians who do not have to lodge tax returns, but qualify for assistance to boost their superannuation savings.

“This is particularly useful given that the increase in the tax free threshold from $6000 to $18,200 from 1 July 2012 will free around one million low-income earners from needing to lodge a tax return.”

The net result of these changes is that an additional 100,000 individuals earning up to $37,000 will now receive the LISC, bringing the total number of low-income Australians who will receive a boost to their retirement savings to 3.6 million.

Here at Indaily, we feel pretty good about that.
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Psyber » Thu Dec 01, 2011 11:37 am

Insight wrote:The net result of these changes is that an additional 100,000 individuals earning up to $37,000 will now receive the LISC, bringing the total number of low-income Australians who will receive a boost to their retirement savings to 3.6 million.
Goodie!
I'm now officially a low income earner and will get the benefits, so long as I draw only the legal minimum from my self-managed Superannuation fund. :D
However, if I do any locum work I'll dip out.
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Re: The Price....or Cost...of a Cwlth Surplus

Postby dedja » Sat Dec 03, 2011 7:23 pm

*cough* asset means test *cough*
Dunno, I’m just an idiot.

I’m only the administrator of the estate of dedja
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Jimmy_041 » Sun Dec 04, 2011 12:54 am

dedja wrote:*cough* groin test *cough*
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Re: The Price....or Cost...of a Cwlth Surplus

Postby Psyber » Sun Dec 04, 2011 8:25 am

Sojourner wrote:
Quichey wrote:The public needs to drop the obsession with the notion of needing a budget surplus.
Apparently we have a AAA credit rating now: http://www.reuters.com/article/2011/11/28/markets-ratings-australia-idUSWNA454520111128
Have to agree with you there, debt can be a good thing, especially if its to create jobs an infrastructure as it was with the Snowy Mountains Scheme. We should be doing a similar thing with a high speed rail link up the east coast of Australia, yes it would be expensive to build, yet it would also put many people into work as well as the knock on effect for jobs. BHP steel would be one firm that would likely do pretty well, concrete companies another and so on.

Only if you can be sure you can eventually pay it back though.
One of the problems of debt is that you reach the point where "just a little bit more won't make much difference" and it grows.
Look at the EU and USA now.

(And the Bannon government in SA that forced the later privatisations, to off load superannuation liability, since the state super fund was gone too - as it is again now..)
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Re: The Price....or Cost...of a Cwlth Surplus

Postby dedja » Mon Dec 05, 2011 12:06 am

Jimmy_041 wrote:
dedja wrote:*cough* groin test *cough*


Sh1t, I'm a ventriloquist! :lol:
Dunno, I’m just an idiot.

I’m only the administrator of the estate of dedja
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