From: yar@cs.su.oz.au (Ray Loyzaga)
Subject: Re: Fightback! the politics and the sums
Reply-To: yar@cluster.cs.su.oz (Ray Loyzaga)
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Date: Mon, 21 Dec 1992 06:57:05 GMT

In article <1992Dec17.064255.14446@trl.oz.au> c.oneill@trl.oz.au (Chris O'Neill) writes:
>In article <1992Dec17.020650.986@cs.su.oz.au> yar@cs.su.oz.au (Ray Loyzaga)
>writes:
>>In article <1gk8k7INNfv1@werple.apana.org.au> speednut@werple.apana.org.au
>(Mark Jose) writes:
>>>Original Message From: chris@suite.sw.oz.au (Chris Maltby)
>>>I agree. The fact that the upper tax brackets will get two adjustments
>>>to their tax thresholds is a slap in the face for all those middle
>>>income workers on the average wage or below who have suffered for
>>>years under a totalitarian wages regime.
>>
>>One of the reasons for this is to bring the highest bracket down to
>>the corporate rate, which should eliminate most of the dodgy things
>>people do with personal companies etc.
>
>i.e. instead of forcing people to do dodgy things to reduce their tax, the
>government just gives up and reduces their tax anyway.

Well it is raising the company tax to 42% from 39, and lowering the
highest marginal rate from 47 to 42.

>>>The big selling
>>>point seems to be "well you'll get more in child endowment". Well what
>>>happens if you are single or married and without children. Does this
>>
>>Tax cuts below $15k average 4.8%, 
>
>Where do you get this figure from?

Not wanting to make you go too far into the past, just look up
page 15 of the Wed Dec 16 SMH, the noted anti-Fightback columnist
Ross Gittins quotes these figures, since he is anti-fightback I
tend to think they are on the lower side of expectation.

>Earlier this year, I posted the following table showing the Fightback tax cuts
>versus income calculated by Dr. John Quiggin from the Australian National
>University Dept. of Economics.  This was published in 'The Age' on 28th
>November, 1991.
>
>Income level    Real tax cut   As % of       As % of
> $91-92          $91-92        gross income  net income
>
> 7000             118.94        1.7           1.8
> 8000             156.94        2.0           2.1
> 9000             194.94        2.2           2.4
>10000             232.94        2.3           2.6
>15000             422.94        2.8           3.2
>20000             144.99        0.7           0.8
>25000             418.99        1.7           2.1
>30000             818.99        2.7           3.5
>35000            1218.99        3.5           4.6
>40000            2065.51        5.2           7.1
>50000            3065.51        6.1           8.8
>60000            4267.67        7.1          10.7
>
>This table assumes an average inflation rate of 4% between now and 1995-96 when
>the package would be in operation.  The real tax cut takes account of the
>fiscal drag that would occur because of this inflation. (Note that the Hewson
>tax scales must be based on dollars in 1995-96 or there will be a $2.9 billion
>hole in the package.)

It would appear that the calculations are bogus.

>We can see that the only people better off with a 4% rise in indirect tax as
>a result of GST will be those earning more than $30000.  This is a minority of
>people.

No we can't the calcs are bogus.

>These figures take into account the $1.2 billion that the coalition expects to
>reap from the black economy.  The coalition expects such a figure even though
>Mr. Reith (their shadow Treasurer) has attended a seminar at which officials
>from Canada and New Zealand denied their GST systems had produced big gains
>from the black economy.
>
>Loyzaga had the opportunity to respond to this when I posted it in January but
>my recollection is that he chose not do do so.  So, here is another
>opportunity.

Ok, why are they bogus, because as you say, they factor in fiscal drag and
4% inflation and then try and factor in the Fightback changes in terms
of the 91-92 position.
What they should really do is state the position the day before
Fightback is implemented, and the position the day after to judge
if the changes are fair in their own terms. Yes it is true that
the population is probably going to be worse off in 1995 due to fiscal
drag (assuming that there were no other tax changes) but it is also
true to say that the day after Fightback they would be better off
than without it because the rejigging of tax scales more than offset
the changes cause by the GST markI.

So if you want to get onto an argument about tax indexation then fine,
because that is all that is being revealed through the above numbers.
It would appear that Dr John Quiggin should have been aware that his
numbers were being swamped by fiscal drag and gave no real indication
of the state of play on the day that the Fightback changes came into
play. Was this a mistake or a calculated deception on his part?
Ok, given 4% inflation and no Fightback, what are the effects
on the real incomes of these groups ... yup they decline.
The only thing that Fightback needs to compensate for is the one off
4.4% inflation effects of the GST, not the previous 3 years fiscal drag.



Newsgroups: aus.politics