Memo from Treasury to the Prime Minister, re: levy.
The temporary deficit reduction levy will not raise as much money as the government hopes. The impact of extra tax on higher earners will change their behaviour. Less exertion produces less tax. In addition, it may well lower economic output in second and subsequent years, thus harming everyone.
Increases in taxes and in government spending have a strong negative effect on investment spending. Investment is the lifeblood of future wealth and future taxes. Top earners pay a vastly greater amount of tax than lower and non-earners net of all benefits each group receives. Asking for more, at a cost to the economy, is economically ill-advised.
The reason payments are so generous is because taxes are so high. Raising taxes further does not solve the problem of overly generous benefits or overly generous access to benefits.
Memo from the Commission of Audit to the Prime Minister, re: levy.
“The nation needs a credible medium-term fiscal strategy that provides certainty over the role of government and fiscal policy in the economy. This entails signing up to a set of fiscal rules that set boundaries around the activities of government while allowing governments the flexibility to implement their policy priorities, but ensuring they do so within a ‘corridor of stability’.”
There is no need for a temporary anything, just a slow, long haul of quality cuts to outlays.
Memo from an old political foe to the Prime Minister, re: levy.
You will lose more votes from a loss of respect than from a reduction in benefits that every taxpayer knows are unwarranted, undeserved and unaffordable.
If you levy the levy, headlines in the tabloids will scream “Axe the tax”; if you don’t, the headlines will scream “Soak the rich”. Forget the headlines.
Memo from party headquarters to the Prime Minister, re: levy.
Do not break a promise.
It appears that these arguments may be failing to persuade cabinet to drop this destructive measure. If hard numbers and a bit of gumption on the equity argument do not appeal, try these.
Memo from god (of Liberals) to the Prime Minister, re: levy.
In The Forgotten People, 1942, Robert Menzies broadcast:
“A great vice of democracy is that for a generation we have been busy getting ourselves on the list of beneficiaries and removing ourselves from the list of contributors, as if somewhere there was somebody else’s wealth and somebody else’s effort on which we could thrive.”
Memo from Jesus as relayed by the apostle Matthew to the Prime Minister, re: levy.
“A man going on a journey called his servants and entrusted to them his property; to one he gave five talents … to another one, to each according to his ability. Then he went away. He who had received the five talents went at once to trade with them; and he made five talents more … but he who had received the one talent went and dug in the ground and hid his master’s money.
“On his return the master said to the man with five talents, ‘Well done, good and faithful servant …’ To the servant of one talent who buried his master’s money, the master responded, ‘You wicked and slothful servant! … You ought to have invested my money with bankers, and at my coming I should’ve received what was my own with interest. So take the talent from him, and give it to him who has the 10 talents. For to every one who has will more be given …”
The parable of the talents demonstrates Christ’s respect for the work and reward. This is harsh medicine, but it is recognition that talent begets wealth.
In Australia’s progressive income taxation system, talent is rewarded but also taxed.
The top 10 per cent of earners (by analogy, those with the 10 talents) pay 45 per cent of the income tax. To squeeze more from the talents than has been accepted for many years is likely to reduce the talents.
And if none of that does the trick, listen to Kerry Packer in 1991 to a parliamentary inquiry. Kerry never bothered with memos.
“If anybody in this country doesn’t minimise their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra.”
In the name of the god, Jesus and Kerry’s ghost, do not levy the levy.