Australia = Tax, Tax, Tax, Tax
Taxed until you die!!!!!!
http://online.wsj.com/article/SB10001424052748704721104576106953804047970.html
JANUARY 26, 2011, 11:29 P.M. ET
Australia Proposes $1.8 Billion Flood Tax
Australian Prime Minister Julia Gillard staked the popularity of her minority administration Thursday on a new US$1.79 billion tax to help fund reconstruction in flood-devastated Queensland state without tipping the government budget further into deficit.
With a slender grip on power after last year's election left neither of Australia's two major political forces with enough seats to govern alone, Ms. Gillard's handling of the flood recovery will be pivotal for the Labor government.
Tony Windsor, one of a handful of independent lawmakers keeping the Labor government in power, warned: "Don't count on my vote" for the new tax, which could raise 1.8 billion Australian dollars. Mr. Windsor is calling for a permanent National Natural Disaster Levy to fund future crises including floods, wild fires, hail storms or cyclones that periodically plague this vast continent.
Ms. Gillard also announced Thursday an immediate upfront payment of A$2 billion toward the Queensland reconstruction effort, to be funded by cutting government spending in other areas.
Ms. Gillard's proposed temporary tax, to apply to Australians earning over A$50,000 a year in the fiscal year starting July 1, drew fire from economists and lawmakers amid local media reports that such a measure was pending.
It comes as Canberra counts the clean-up cost of its worst natural disaster in decades, which was estimated by officials Thursday to trim some A$5.6 billion from the government budget. In announcing the tax, Ms. Gillard is judging that the political cost of not delivering on a promise to restore the budget to surplus by the year ending June 30, 2013 would be greater than any voter backlash against higher taxes.
"The great majority of Australians are ready to contribute, I have no doubt about that," Ms. Gillard said.
Rick Kuhn, a political expert at Australian National University, described it as "an incredible act of hypocrisy on the part of the government."
"It is placing the burden for the flood relief onto ordinary working class taxpayers at a time when the government is going to be cutting the corporate tax rate," he said, referring to plans to cut the company tax rate to 29% from 30% from July 1, 2013.
Devastating floods have washed out thousands of homes, roads and rail lines and killed at least 25 people across resource-rich Queensland state since December, disrupting exports and destroying agricultural crops. Australia is the world's largest exporter of coal used for steelmaking and the second largest supplier of coal for power plants. Separate floods spreading across Victoria state over the past two weeks have affected 60 towns in an area larger than Denmark.
"It is an extraordinary event and it requires an extraordinary response," Finance Minister Penny Wong said earlier Thursday.
But Joe Hockey, shadow Treasurer for the main conservative Liberal-National opposition coalition, said a tax to fund the flood recovery effort is "too much" on top of an expected rise in food prices as a result of the damage to agricultural land.
"On top of the recent Labor party increases in the cigarette tax and also alcohol taxes and car taxes and given that electricity prices are rising, it is too much at this point in the economic cycle," Hockey said.
Ms. Gillard estimated that the floods will cut economic growth by half of a percentage point in the 2010-11 financial year.
ANZ economists warned that any flood tax will act as "another constraint on household spending", reinforcing market expectations that the country's central bank will hold interest rates steady for some time.
ANZ has pushed out its own forecast for the next Reserve Bank of Australia rate rise to the third quarter of this year from the second quarter.
Economist and RBA board member Warwick McKibbin on Thursday panned the tax proposal as politically motivated, warning of unintended consequences.
Many Australians donated to relief funds as the floods swept through Queensland's southeast in January. If the community begins to expect the government will impose a new tax, fewer people are likely to donate in the first instance in the future, he said. "It does create very bad incentives," McKibbin said.
Relaxing the government's goal of restoring the budget to surplus by the year ended June 30, 2013 is a better option, he said. Finance Minister Wong reiterated Thursday the government remains committed to that budget target.
Taxed until you die!!!!!!
http://online.wsj.com/article/SB10001424052748704721104576106953804047970.html
JANUARY 26, 2011, 11:29 P.M. ET
Australia Proposes $1.8 Billion Flood Tax
Australian Prime Minister Julia Gillard staked the popularity of her minority administration Thursday on a new US$1.79 billion tax to help fund reconstruction in flood-devastated Queensland state without tipping the government budget further into deficit.
With a slender grip on power after last year's election left neither of Australia's two major political forces with enough seats to govern alone, Ms. Gillard's handling of the flood recovery will be pivotal for the Labor government.
Tony Windsor, one of a handful of independent lawmakers keeping the Labor government in power, warned: "Don't count on my vote" for the new tax, which could raise 1.8 billion Australian dollars. Mr. Windsor is calling for a permanent National Natural Disaster Levy to fund future crises including floods, wild fires, hail storms or cyclones that periodically plague this vast continent.
Ms. Gillard also announced Thursday an immediate upfront payment of A$2 billion toward the Queensland reconstruction effort, to be funded by cutting government spending in other areas.
Ms. Gillard's proposed temporary tax, to apply to Australians earning over A$50,000 a year in the fiscal year starting July 1, drew fire from economists and lawmakers amid local media reports that such a measure was pending.
It comes as Canberra counts the clean-up cost of its worst natural disaster in decades, which was estimated by officials Thursday to trim some A$5.6 billion from the government budget. In announcing the tax, Ms. Gillard is judging that the political cost of not delivering on a promise to restore the budget to surplus by the year ending June 30, 2013 would be greater than any voter backlash against higher taxes.
"The great majority of Australians are ready to contribute, I have no doubt about that," Ms. Gillard said.
Rick Kuhn, a political expert at Australian National University, described it as "an incredible act of hypocrisy on the part of the government."
"It is placing the burden for the flood relief onto ordinary working class taxpayers at a time when the government is going to be cutting the corporate tax rate," he said, referring to plans to cut the company tax rate to 29% from 30% from July 1, 2013.
Devastating floods have washed out thousands of homes, roads and rail lines and killed at least 25 people across resource-rich Queensland state since December, disrupting exports and destroying agricultural crops. Australia is the world's largest exporter of coal used for steelmaking and the second largest supplier of coal for power plants. Separate floods spreading across Victoria state over the past two weeks have affected 60 towns in an area larger than Denmark.
"It is an extraordinary event and it requires an extraordinary response," Finance Minister Penny Wong said earlier Thursday.
But Joe Hockey, shadow Treasurer for the main conservative Liberal-National opposition coalition, said a tax to fund the flood recovery effort is "too much" on top of an expected rise in food prices as a result of the damage to agricultural land.
"On top of the recent Labor party increases in the cigarette tax and also alcohol taxes and car taxes and given that electricity prices are rising, it is too much at this point in the economic cycle," Hockey said.
Ms. Gillard estimated that the floods will cut economic growth by half of a percentage point in the 2010-11 financial year.
ANZ economists warned that any flood tax will act as "another constraint on household spending", reinforcing market expectations that the country's central bank will hold interest rates steady for some time.
ANZ has pushed out its own forecast for the next Reserve Bank of Australia rate rise to the third quarter of this year from the second quarter.
Economist and RBA board member Warwick McKibbin on Thursday panned the tax proposal as politically motivated, warning of unintended consequences.
Many Australians donated to relief funds as the floods swept through Queensland's southeast in January. If the community begins to expect the government will impose a new tax, fewer people are likely to donate in the first instance in the future, he said. "It does create very bad incentives," McKibbin said.
Relaxing the government's goal of restoring the budget to surplus by the year ended June 30, 2013 is a better option, he said. Finance Minister Wong reiterated Thursday the government remains committed to that budget target.
