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The Forum > Article Comments > The RBA a fine institution but could do better > Comments

The RBA a fine institution but could do better : Comments

By Nicholas Gruen, published 21/6/2012

The RBA runs like clockwork, but perhaps something less metronomic is required from time to time.

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The titanic might have suffered much less damage and or survived the calamitous collision with THAT iceberg, if they stayed on course, and simply signalled, all astern?
If we could but completely reform and vastly simplify the tax act, to in effect, impose a single stand alone unavoidable expenditure tax in exchange for a complete repeal of all the current complexity we call a tax act, we could do a number of things.
The first would be to entirely remove any need for compliance or the costs of compliance, which currently rips an averaged 7% from the averaged Australian based bottom line.
A single stand alone tax, can then be very marginally adjusted to alone control/remediate any inflation or stagnation in the economy! And region by individual region, when and if necessary.
Meaning, the RBA would no longer need to adjust interest rates, which instead, could be progressively reduced until they acted to really power up a still inflation free economy; or, those parts of it currently in the doldrums.
Rhrosty.
Posted by Rhrosty, Thursday, 21 June 2012 4:05:15 PM
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Footnote: A single stand alone expenditure tax set at a very marginal 5%, would collect around a 100+ billion more, than the complete current raft of complexity we call a tax act; and beggars belief, that any sane and rational administrator/administration, would want to keep it; and or, all the rorts and or avoidance it makes possible, through its sheer complexity?
Rhrosty.
Posted by Rhrosty, Thursday, 21 June 2012 4:13:50 PM
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Further footnote: When ones considers the destiny of demography, we know we cannot continue to increasingly tax a shrinking cohort of income earning tax payers; who if nothing much changes, could be asked to also support a growing cohort of increasingly dependant baby boomer retirees?
Many of who, have seen their entire retirement nest eggs progressively removed by the GFC; and or, surprisingly unwise investments, that rely almost exclusively for now non-existent capital gains, for any and or all cash flow and management costs requirements?
Those investments that largely survived reasonably healthy and in good shape, through the double decade long Great Depression. Had single digit PE ratios, and keep a reasonable dividend flows coming for the investor, thus proving they were both well managed and like say, Dixon homes, virtually debt free.
Sadly, that has not been the case for most retirement funds or self funded retirees; many of who may well increasingly draw on the shrinking cohort of taxpayers.
Better we should end any and all reliance on the latter and transfer all our future tax needs, as outlined, directly onto the GNP!
We can then endlessly grow the tax base by simply growing the economy, and eminently achievable, by progressively removing any and all forms of poverty and the ever increasing discretionary spend that simple wealth redistributing strategy, would alone accomplish!
Any blame shifting, excuse making govt, not capable of competently achieving just that, by basically/progressively narrowing the income gap between the haves and have nots, [a win win outcome,] simply doesn't deserve to hold office!
Rhrosty.
Posted by Rhrosty, Thursday, 21 June 2012 4:50:37 PM
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In 2009 Prof Michael Hudson visited our RBA and asked them why our banks borrow must of our money from OS who create this money with the click of a computer mouse.30% of our mortage money come from OS Banks.We are borrowing OS to buy our own land.

If OS central banks can create money in their computers,why cannot our RBA do the same for our banks and thus reduce our taxes and debt?What is wrong with the RBA computers?

We all know that the US Federal Reserve (a private group of banks) has been creating $ trillions for bailouts and their never ending wars.Why cannot our RBA do likewise for us?
Posted by Arjay, Friday, 22 June 2012 7:00:14 AM
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