How are we (Australia) going to pay for this COVID-19 spending?

[amaroo]

Agreed, it's not in the immediate term but the taxes we already have to pay are too burdensome for someone in my position.

What do you mean by - someone in my position?

Last Oct we were in the USA experiencing a little of the 1 percenters's lifestyle. We met quite a few locals who spoke about the tax system - in the US the states also impose an income tax in addition to the federal tax. They all spoke proudly of arranging their affairs to live in the progressive states like California and New York, but for tax purposes they were structured as residents in other states. One wonders how many noisy progressives are doing this

What a strange system.

 

[TheRealTMA]

Government debt is irrelevent and smoke and mirrors. Given that the Reserve Bank is progressively buying government bonds (debt) it’s really a Magic Pudding.

 

[seanpodge]

Given rock bottom interest rates and a fairly low debt to GDP ratio, how to pay for it is hardly a pressing matter. Indeed, given the scale of the crisis, it would be better to spend too much than too little. But given that governments (of any persuasion) are likely to use this as a pretext to do what they wanted to do anyway, I may as well put in a bid.

Firstly though, the aim should be to restart the economy and boosting demand. Therefore, many of the new programs and enhancements should be considered for retention after COVID-19 is defeated. Number one is the rise in Newstart. By doubling it as soon as the "dole bludger" myth was untenable, the government has admitted that the previous rate was nowhere near adequate to live on. Furthermore, poor people will actually spend the money in the economy rather than try to pump up a housing bubble or move it to Panama. Lift the DSP by at least the same amount.

The most obvious candidate for savings is the legislated tax cuts due to come in in 2024. Apart from destroying the government's revenue base, they also aren't active yet, so can be quietly dropped without dampening consumption.

This is also why raising the GST shouldn't be considered. This would clearly suppress demand by raising prices.

There's also a fair bit of government upper class welfare that could go. Franking credits are an obvious candidate (although the short term savings are likely to be minimal). The private health insurance rebate has been a waste of money for years and should go. Capital gains tax concessions should be wound back/eliminated. Perhaps since Border Force can't stop a boat that is actually dangerous, its budget could do with some paring back. And maybe a better look at if the government really needs to hand out money to schools that can afford to build their own Olympic swimming pools and opera halls.

 

[TheRealTMA]

Given rock bottom interest rates and a fairly low debt to GDP ratio, how to pay for it is hardly a pressing matter. Indeed, given the scale of the crisis, it would be better to spend too much than too little. But given that governments (of any persuasion) are likely to use this as a pretext to do what they wanted to do anyway, I may as well put in a bid.

..

Not to mention the appalling royalty rate we charge for PRRT on LPG. Can’t remember the figures now but Qatar got a hundred times the royalty we give away to the LPG Companies.

 

[CaptJCool]

Given rock bottom interest rates and a fairly low debt to GDP ratio, how to pay for it is hardly a pressing matter. Indeed, given the scale of the crisis, it would be better to spend too much than too little. But given that governments (of any persuasion) are likely to use this as a pretext to do what they wanted to do anyway, I may as well put in a bid.

The most obvious candidate for savings is the legislated tax cuts due to come in in 2024. Apart from destroying the government's revenue base, they also aren't active yet, so can be quietly dropped without dampening consumption.

This Govt legislated tax cuts because the then forward projections were already way ahead of revenue just 3-4 years ago...and
In light of the 0.27% interest rate on borrowings, its a really small expense

 

[Hvr]

And now we know the Government's plan:

Tax cuts to business and reintroduce Work Choices.

Tax breaks for big business, deregulation and wide-scale industrial relations reform will form part of the Morrison government's attempts to lift the nation out of the economic black hole caused by the global coronavirus pandemic.

Morrison flags company tax cuts, IR reform as key to COVID-19 economic recovery

The Prime Minister has warned the economy will be "hit by a truck" by the coronavirus and promised to fast-track infrastructure projects and an aggressive pro-business investment strategy to help the budget claw its way back.

www.theage.com.au

So less money and security for employees when (if) they ever get another job, and less tax from businesses.
When employees have no job security they won't spend. And yet the economy needs money spent.

When businesses pay less tax there's less money in the economy.

So two activities that will flatten the economy and it's supposed to pay back a multi-billion dollar debt?

 

[serfty]

And now we know the Government's plan:

Tax cuts to business and reintroduce Work Choices.
..

I do not see Work Choices mentioned in that article?

Nor is there any inference to same.

The article also had this:

He has promised to fast-track new and existing major infrastructure projects and adopt an aggressive pro-business investment strategy ahead of the October budget to help the country claw its way out of an expected virus-induced recession

This statement is incorrect: "When businesses pay less tax there's less money in the economy".

Other than that, what is wrong with tax cuts to business?

 

[jeza]

The IR change introduced was to allow an employer to only give 24hrs notice to vote on changing an existing EA.

Notice for worker pay deal votes slashed

 

[p--and--t]

The IR change introduced was to allow an employer to only give 24hrs notice to vote on changing an existing EA.

Notice for worker pay deal votes slashed

Reports that it is deliberate ploy to prevent employees from getting union or legal advice on long term impacts of proposed changes to agreements (after industry lobbyists have been extremely active in CBR in the last week)

 

[N860CR]

Reports that it is deliberate ploy to prevent employees from getting union or legal advice on long term impacts of proposed changes to agreements (after industry lobbyists have been extremely active in CBR in the last week)

In fairness, during this “crisis”, industrial agreements were out the window anyway. FWA couldn’t handle the number of EBA breaches across who knows how many fields that have just slipped through under the guise of a “pandemic”. Even essential government medical workers have had their basic rights torn away from them... I think the precedent has been well and truly set.

 

[p--and--t]

In fairness, during this “crisis”, industrial agreements were out the window anyway. FWA couldn’t handle the number of EBA breaches across who knows how many fields that have just slipped through under the guise of a “pandemic”. Even essential government medical workers have had their basic rights torn away from them... I think the precedent has been well and truest set.

From reports the previous arrangement wasn't exactly burdensome at 7 days.

If that was so, then demanding a 24hr turnaround is unnecessary and unreasonable.

 

[CaptJCool]

This out yesterday

30% uplift since 2013-14 plus AS % around 1.6 absolute points of GDP around 6%

Taxation Revenue, Australia, 2022-23 financial year

Statistics about taxation revenue collected by the various levels of government in Australia

www.abs.gov.au

 

[cove]

Lets just go negative interest rates for a while so the debt pays itself off....

 

[get me outta here]

Would that apply to people relying on interest for income, cove?

Lets just go negative interest rates for a while so the debt pays itself off....

 

[cove]

GMOH interest income could become very much obsolete based on the RBA rate at 0.25%.

 

[UP4014]

I'll probably be howled down, but there is no urgency to pay back. The level of debt is important but not critical, a country like Venezuela has less that 30% sovereign debt but is shambolic. Australia, and both sides of politics, are pretty good at fiscal management trying to pay off bonds or other securities early isn't needed. Steady as she goes. Pay back a bit and spend a bit more on projects like rail or airports or what ever.

We aren't leaving debt to our kids, that's a bit of red herring, what we are doing by spending now to prop up the economy is to give the kids a head start on where they would be if we didn't prop things up right now. If the Govt let the economy crash with say 25% unemployment and homeless families in every state, businesses shut and exports collapsed, we would be setting up our kids of a life time of poverty and decades for those families to come back from.

Spending now improves Australia's economic position over all including future bond debt raising.

 

[scaredeycat]

I worry more about what happens when the stimulus payments end. By that stage the US economy may well be a smouldering wreck and the ramifications for the rest of the world don't bear thinking about.

 

[UP4014]

I worry more about what happens when the stimulus payments end. By that stage the US economy may well be a smouldering wreck and the ramifications for the rest of the world don't bear thinking about.

He trick with the US economy is watch California, that’s the powerhouse. It doesn’t really matter what the other states do as Ca will have the influence on us.

 

[drron]

Maybe the world needs to finally start a concerted effort to deal with tax havens and rorts.more than enough to pay the bills.

https://www.icij.org/investigations...org/inve&utm_medium=social&utm_source=twitter

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[CaptJCool]

Maybe the world needs to finally start a concerted effort to deal with tax havens and rorts.more than enough to pay the bills.

https://www.icij.org/investigations...org/inve&utm_medium=social&utm_source=twitter

[/URL]

What’s been done here in Oz

Data leaks | Australian Taxation Office

We are constantly receiving information that helps us detect and investigate tax evasion and other illegal activities.

www.ato.gov.au