Wednesday, July 23, 2014

We need a Centre Party to fix the Mining Tax, not just scrap it

The politics around the Mining Tax highlights the need for a true centrist party in Australian politics. The budget has a problem, it is not getting the revenue it needs to run its normal level of services to the community. At the moment the government's tax intake is below average and spending levels are no higher now than they have been in the recent past (GFC spending excluded).

A Centre party would see the need for a balanced and reasoned approach to the Mining Tax. It doesn't make budgetary sense to keep the spending associated with the tax if the tax is scrapped, it pulls a double whammy on the budget by scrapping revenue and increasing spending. But it doesn't make social sense to scrap the spending either because it provides an important social benefit. And of course, the Mining Tax isn't raising anywhere near as much as it was first thought it would.

So, if a balance needs to be struck between the need to spend money on socially progressive programs as well as maintain a balanced budget, the answer is simple, you just fix the tax. Australia is about to go through a mineral exporting boom, yet we are about to get no social benefit from it. If Luke Mansillo's article in The Guardian is anything to go by, other countries successfully tax the mining industry without destroying it. In Norway the tax is 78%. Now we don't need to go to that extreme but we can find somewhere in the middle, surely.

Some people are suggesting that The Palmer United Party might be the new centre party but I'm afraid PUP are showing themselves to be anything but centre on this issue. It does seem that the self interest of their leader is clouding their judgement of where the centre might be. It does not make budgetary sense to scrap a tax but maintain the spending it supports. One either has to come up with another revenue stream and keep the spending, or scrap the tax and the spending at the same time.

Labor want to keep the spending but don't want to admit that the tax needs fixing. The Coalition wants the extreme position of no tax and no spending, it would seem. Most people just want it fixed.


If you agree with the above and would like to read more about Centre politics then check out The 3rd Party website.

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