Why don't governments put up taxes instead of interest rates?

[andye]

Difficult to find taxes that would hit the current beneficiaries of the current economic circumstances. And as alluded to before taxes take time to start and stop

Franking credits-held as a reason for Shorten losing election

Minerals resource tax-major reason for downfall of Julia Gillard

GST-would stoke inflation further in short term

Negative gearing-held as other reason for Shorten losing election and in short-term would fuel rental increases. In medium to long term would curb house prices (politically tough but arguably would be better for Australia of future. Having said that would hamper current earners ability to accumulate wealth as many older investors will have more positively-geared properties)
Which goes along with
Reducing discounted CGT on property investments-politically tough and why should an investment in an ASX-listed property company be taxed less than a private property investment. Tax gains likely to take years to come to fruition and would be a disincentive to sell

Reducing the discounted tax on super earnings from say $3M to $1.9M. People would just move money out of super into standard investments with many retirees on low tax regimes.

Tax withdrawals from super-good luck that

****

Overall, I think mortgaged people will continue to do what they have always done when confronted with mortgage stress:-cut spending, take a second job, secondary earner go from PT to FT. Increasing income tax revenues suggest people are doing this already. Not saying this is 'fair' but the politics is too hard to do otherwise.

I think retail businesses with reduced money coming in will be a bigger problem than mortgage defaults

Also aware that AFF probably has a higher proportion of winners than general population.

Am a bit worried that interest rates won't fall fast as mortgage payments/rent are part of inflation which acts paradoxically to the monetary policy intention

 

[clifford]

Yes, but squibbing on interest rate rises means that the Pacific Peso nosedives. Can't have it both ways.

Is that what frequent flyers want?

 

[cjny]

I agree the lack of offset means you pay more interest over the life of the loan. There are some loans from smaller lenders which allow you to fix and have an offset where you can pay >$10K pa into. My lender has an offset and I'm on variable but don't think they're one which would allow extra payments on a fixed rate.

I'm not sure how the Americans handle this. My impression is that you can't have your cake and eat it too.

In the US people refinance loans to lower rates if it goes down (vs. their original rate). Generally after 5 years into loan period, this becomes worthwhile vs. any fees/penalties/prohibitions, although some do it sooner. In general it is what people had been doing for most of last 2 decades.

 

[CaptJCool]

In Australia
A lot of our tax take is “set and forget”
And bracket creep where wage rises push you into ever higher tax brackets

2022-23 saw the highest ever federal tax take

Commonwealth Monthly Financial Statements | Department of Finance

The Final Budget Outcome for the 2022-23 financial year is yet to be released.

2021-22

https://archive.budget.gov.au/2021-22/fbo/download/06_appendix_b.pdf

Receipts $584 billion

We had $579 billion in by 31 May 2023 (including a small fortune in corporate tax over $140 billion - helps the ATO won some transfer pricing cases wiping out overnight well over $30 billion of carry forward losses)

Tripled receipts in 20 years

The government has no need to change tax rates
It’s raising more taxes than it can poke a stick at