Perhaps the Flood levy should be more aptly renamed the Labor surplus recovery levy.

It is hard to understand some of the moron responsis, or even to the poor outlook of the labor party in responding. We had a 66.6% top tax in the years 1950 to 1970. Our economy improved, life was much better for our working community, and nobody suffered. The too high salaries and other incomes were driven down and costs of goods and services reduced. There was no harm, the over paid community were still over paid but not so much. The whole country was better off. Unfortunately, Politicians are politicians, and can't keep their hands off anything that is running smoothly, I have had to work with similar people. The Liberal party's outlook is a bit draconian, I think that most people would like to see a permanent system set up in our high tax section to try to cover all future disasters, the biggest problem would be keeping pollies hands off of it.

Saul says
"The Government could have borrowed some or even all of the $5.6bn it estimates that it will spend on Queensland’s recovery and reconstruction."

What an interesting idea. I would love to see Saul Eslake's "declaration of Interest". I would be delighted to discover to my satisfaction that he is no-one's shill. And without diverting to Wikipedia, on the off-chance, I wonder idly what his opinion was, of the proposed "Khemlani Affair" overseas loan.

Taxes is the one of the favorite neo-con "four letter" words. I can understand that. Listed companies don't want to cut their shareholders' returns or prejudice their gambles by losing money to taxes, however well spent they may be.

And who pays the lowest taxes of all? I'd love to see an intelligent, articulate column written on that topic, here on Online Opinion.

My guess is that listed companies are taxed a significantly lower proportion of their discretionary income, however you might define that term with respect to listed companies, so as to fairly compare it to the discretionary incomes of wage-earners and small businesses.

I would say that all of the amount payed to shareholders as dividends is discretionary, to be decided by the oligarchy in control of the listed company.

My guess is that the listed company won't be telling its investors that "there won't be any dividends this year because we pitched in to pay for the catastrophic flood damage in Australia, instead of paying you so you can put marmalade on your breakfast table, along with this morning's Wall Street Journal". Well, of course they wouldn't say that.

My guess is that Saul, despite despite his acknowledgedged general expertise, won't be writing any expose-ays about who pays a fair tax rate toward our common wealth.

Totally agree with that observation, Shadow Minister

Thanks BR

We have Gina Hancock named Australia's richest person. It appears they stopped counting at 6 billion this year. The same woman has set up a web site, I think it is called ANDRA ( I am not at home to check), The main aim of this website is to promote lower taxes in the North West of Australia. It has launched a petition to support the lowering of taxes. It is a very sophisticated web site that reminds me of the American TEA Party. She has also bought into channel 10, the reasonI can only guess. Maybe she sees it as a platform to promote lower taxes, but lower for whom?

Shadow I do not get your point. Has not Labor promised to get the budget back to surplus. Would not any action they take now and in the coming budget be targeted at achieving a surplus. I, among many do not believe that getting to surplus is necessary but I also cannot see that harm would occur if they do, as long as they do not contract the economy too much. Taxes are not and should not be set in stone. They need to be adjusted as the world and local economy demands. Sometimes we receive, sometimes we give. with a bit of luck it will balance out.

Hi Flo,

Could Gina be worried that Squiggy might run out of marmalade?

Flo,

Taxes while not set in stone, should not undertaken lightly, and a new tax simply to help Labor get a surplus, that it was clearly not interested in previously seems extremely cynical.

The tax was actually not at evenly distributed, nearly 50% coming from those earning greater than $200 000 p.a. Labor might well think that this is not their supporter base, and so won't cost them votes, however, this particularly vocal section of the population has far more ability to make the government's life difficult. Just see what happened with the mining tax.

Given the size of the economy and existing tax revenues, and the record spending of the Labor government, taxpayers should expect that reaching surplus could still be easily achieved by cutting some of Labor's fat.

The money that was spent was essential. The Opposition has admitted they would have spent as well. Maybe they would not have spent as much or been as successful. The deficit was not cause alone by the money spent, reduced receipts played a role as well. We have come through a bad time with our economy intact.

The mining industry did not save us, as they were among the first to put off workers. Many experts, here and overseas give Labor a big tick for the actions taken during the worldwide downturn. The tax for a change is a very small impost on those who can afford to pay.

I do not see it justice that all should pay equally, if they the low paid worker does not have the ability to pay. You cannot tell me that those earning over 200.000 are going to have problems meeting the impost.

I supposed you could say that Mr. Howard made sure he gave the upper income earners the biggest cuts or increase government’s benefits because that was his base. My statement is just as meaningless as yours is.

2008 was the time to spend, now is the time to pullback. Labor has never tried to make out that anything but this is has to happen.

I suspect you will see a great many cuts in the next budget, which I imagine many will complain. I am still waiting to hear what Mr. Abbott would cut, except for the NBN and selling Medibank

"Could Gina be worried that Squiggy might run out of marmalade?"

Nah. she just want to keep everything. 9 billion or more in one year is not enought to keep her in? (God knows what)

If a particular tax does something to improve the economy or obtain extra wealth to overcome disasters, it should be done. There is enough wealth in the high incomes obtained by Gina, Clive palmer and others. Clive has said that he does not want that high salary, but wants the low tax on mining to remain or be lowered. It is unfortunate that these politicians were not born 70 or 80 years ago if at all, the 66.6% top tax caused recovery for our workers and the economy. It appears that our treasurers and Prime Ministers did not want to be shown up by someone who was not a lawyer, and then went on that path to prove their worth, well they proved it, they created a recession or three, and put the economy back almost to where it was in the 1930's during the depresion. It certainly shows up their value, zero.

As for paying for the Qld Floods or indeed for all natural disasters in this country a helluva lot can be done to help those in need.
For example the Art Unions could instead of a 5 million dollar mansion for first prize, make available 20 $250,ooo houses, instead of $100,000 cars provide other goods for more people. What I mean is to spread the prizes for the benefit of more than just one winner.
Why not have lotteries which offer annual income rather than some huge useless mansion most winners can't afford to keep anyway.
It would help job creation & lowering unemployment.
This is indeed a time for helping. Helping starts with cutting back on unnecessaries. Now is the time to put a stop to pay rises, particularly public service positions and, yes, that goes for teachers as well. Most of all though for Parliamentarians. If they had any integrity at all, our pollis would now make this retrospective to the last pay rise.
Make the Insurance companies pay for the wage earners before paying out the wealthy.
There is plenty of money out there. It just needs fair distribution.

*There is enough wealth in the high incomes obtained by Gina, Clive palmer and others.*

Merv, your sense of nostalgia is touching, but in your 80s, you
are perhaps not up with the modern world and how things have changed.

Both Gina and Clive would or could own their own Lear jets. So they
can live anywhere for tax purposes really. Monte Carlo, Singapore,
Hong Kong, Geneva. They could flit around with their Lear jets,
popping in to check on local investments, but pay no tax at all
locally, if they chose to do so.

So rather then x milllion $ a year, you would get nothing, if
you decided to screw them and they responded in a logical way.

Hardly smart thinking. But perhaps in your time, they never
flitted around in Lear jets.

In spite of what Merv and his colleagues the relatively well off are not an endless source of tax. What became apparent in the 80s is that when tax rates dropped, the revenue increased, and skills returned to the country.

Australia is in no way the lowest tax country, and there are demands for skills all over the world. People don't look at salaries, they look at what they take home and the cost of living. At a time when the country is looking to attract skills, random and arbitrary taxes are not the message one wants to send.

At $200 000 the $100 p.m. is noticed, and considering that most of the donations came from these people, there is a palpable anger at this impost.

Shadow Minister, you say:

(1) "The tax was actually not at evenly distributed, nearly 50% coming from those earning greater than $200 000 p.a."

SM, can you name the particular tax you are discussing, and the source of the statistics behind your opinion? I'm interested.

and
(2) "At $200 000 the $100 p.m. is noticed, and considering that most of the donations came from these people, there is a palpable anger at this impost."

SM, is this remark based on your personal interactions, or are you basing your opinion on more objective data, that you can share and we can examine?

Sir Vivor,

http://www.couriermail.com.au/ipad/rich-to-pay-half-of-flood-levy/story-fn6ck51p-1225996719145

As for the anger, I personally am in that bracket, as are many of my colleagues in project management and I and many of them have contributed towards the disaster and are now spitting blood that we are being forced to contribute to the budget surplus top up fund.

Of those I work with, I don't know of any that supports the new tax. I wouldn't be surprised if there is a surge in donations to the liberal party.

Shadow Minister,
Looking at the article that you cited, it appears to me that the money is coming from those most able to afford it.

The article quotes the treasurer:
"Six out of 10 Australians will pay less than a $1 a week for the flood levy ... "

The allocation model was done, the article says, by the National Centre for Social and Economic Modelling.

The article goes on to say that
"The centre's analysis also reveals the Top 20 postcodes in Australia where high-income earners will be hit hard by the flood tax and confirms millionaire's playground Point Piper, the suburb that Liberal MP Malcolm Turnbull calls home in Sydney, will be asked to dig the deepest.

Residents of Mr Turnbull's 2027 postcode, where the average taxable income is $180,000, will pay the highest average levy - $938."

I guess 2027 would include you in spirit, at least - assusming your postcode is different to Malcolm T's.

What puzzles me why the folks you talk to are so keen on giving further money to a political party, after getting stuck for nearly a thousand dollars! (That rounds up to 1% of your income!). Especially, giving it to the the Liberals, who get such generous donations from the extractive industries. What can you really add, percentage-wise to the big offerings by the big players? What's one percent of your income compared to 0.01% of theirs?

Perhaps you could get the National Centre to model a fair and proportional contribution rate, based on income, to the party of your choice at the next federal election.

If the big corporate players shoulder the burden according to their "ability to pay", (including the ones worried about their discretionary income as it might be affected by the feral taxifacators of the Labor Left Wing), then you shouldn't have to donate much more than a tenner, to the party of your choice.

Sir Vivor,

So why not simply tax everyone at 100% above $200 000 as they can afford it.

Simply because Australia like every country in the world is competing for skilled labor, and treating them as cash cows or ATMs is hardly an encouragement. When Labor pushed the peak tax rate to 66%, the skills fled, the tax revenue dropped, and the economy foundered. Random taxes tells these people that their income is not secure, and subject to the whim of the government.

[Deleted for abuse.]

Shadow Minister, you say:
"When Labor pushed the peak tax rate to 66%, the skills fled, the tax revenue dropped, and the economy foundered."

It's hard for me to believe that the Australian economy vitally depends on an invisible posse of Paladins, with "Have Skills, Will Travel" cards that they can send ahead to whatever sunny clime has the most exciting job and the lowest tax rates of the day. Is it really this little-known band of quiet achievers that keeps our Australian unemployed stocked up with raspberry cordial?

And where did these Paladins flee to, with their skills? I'm curious. Once again, some text supporting your opinion will be gratefully received.

Never do any work for the well to do set, they are the worst people at paying their bills. Work for the little man anytime, they don,t order a job unless they have the money first.
People earning over 200,000 / yr and whining, not surprising at all.

They also had death duties, which I am suspect was supported by both sides of politics. This tax was something the low income did not have much to worry about, they had nothing to leave.

I wonder where Shadow Minister got his dream from, Harold Holt in the 1950's, found that the 66.6% tax on the top earners was a great way to stop obscene incomes, and there was a great improvement in the economy, and Harold Holt was the Liberal party Treasurer and later became our Prime Minister. I suggest that if you want to pick up information about the 1950's, or any other era, you might try asking someone who lived in that era, instead just grabbing someone’s raving. It really is a shame that he did not also place a no tax on an amount probably about $30,000 today. If you had lived during that era, you would have appreciated the lowering of prices of goods and services, the price of the water and electricity would have remained low, and the price of land and houses was protected, My father had a new two bedroom built and bought the land and house for the equivalent of $7,750 in 1964, in Clontarf, QlD and this was a normal situation with new houses ranging up to about $70,000. It wasn't until about 1986, that prices started to skyrocket, when the top tax was reduced down to about 55%, and prices kept going up with the tax reductions of the 50%, 47% and now 45%. The US is in a depression with their 35%tax. Look up “Tax history of the US”, also “Tax history of the UK”, and “Tax history of Australia” as well as this, look up”Taxes around the world”. If you remember that the US had a recession in the 1930's it might give you some idea why we have a bad “Global economy.

Merv,

An excerpt on Holt:

"Holt’s first budget, brought down on 11 August 1959, was one to please both the voters and the Treasury. It provided a cut in income tax and an increase in pensions"

Dream on.

As the tax attributed to Harold was about 1947, and the tax in 1950 was about 75% but reduced to 66.6% by 1953, and remained at that rate for the next twenty years. I don't think too many people thought it was a bad tax. The only time since then, where any time was spent on a particular tax, is in the last 20 years with the same tax rate lasting about five or six year runs generally involving a recession or two. The workers in those years between 1950 and 1970, were very happy, as the cost of goods and services dropped down. If you want confirmation about that, ask someone who lived then, don't rely on articles on the computer, I have read some of them also.

Merv,

In 1947 there was a Labor government.

Holt was Labor minister in the Menzies Government and did not become treasurer 'till 1958, and his first act was to reduce income tax.

Please read up on your facts before posting this fantasy.

Considering that all other countries had similar taxation rates post the war, and the standard of living was far lower than today. I would suggest that your memory is more than a little foggy.

Great article by Saul Eslake.

How convenient of Sir Vivor to forget the other taxation those in the top bracket pay. The suggestion that somebody on over $100,000 can afford $500 -$900 is a bit mischievous absent the fact that they pay between 30% and 45% of their taxable income in income tax already. they also pay more GST as consumption levels increase with income.

Even so - this misses the point. the tax is only the result of the Government's mismanagement of the $350 billion in revenue it already receives. Nobody questions the need to respond to disaster. Many of us simply resent the Government asking taxpayers to cough up extra to cover its waste.

BTW, when the top tax rate was at 75% it was also levied on relatively few people at the very highest incomes (and only on a smaller proportion of their income) and the overall government spend was much lower, pensions were lower (and based on mandatory contributions), many houses were unsewered, a lot of roads were unsealed and average incomes and purchasing power was lower for the lowest income earners. The invalid pension and unemployment benefits were harder to get and the pension taper had a cut off of 100% when income over the threshold was earned (as opposed to a 40% taper now). There was no Medicare. Is the suggestion that we should return to the same level of expenditure as the 1950s? Because that is the only way that tax system could actually work. Now more people pay a proportion of their income and the top rate cuts in at much lower income levels.

Gobsmacked, you point out that the higher income brackets pay more in GST because they spend more money, and also, they are income-taxed at higher rates. No doubt. Thus are they left with what meagre leavings their tax accountants can wrest from a socialistic system: deductions for negative gearing, deductions for this and that, donations to charities, etc etc - a penny deducted is a penny earned. I'm certainly well-off enough to guess at what an onerous burden it must be, to earn over $150,000 per year. Even I, on a much more modest income, have a tax accountant

You also parrot the Leader of the Opposition's idea of the day, on this evening's news, that the government mismanages its finances. That has been Mr Abbott's big idea of the day for a fair few days now, months even, and it's time he tries thinking outside the box during his morning shower. I expected better of a Rhodes Scholar.

My first post explored the idea of discretionary income: a clear enough idea for individuals, but not (to my knowledge) well defined when applied to corporate bodies. That post made the point, that if dividends are considered as a discretionary use of a listed company's profits, then perhaps there are other choices that could be made with the money available to put marmalade and the WSJ on the breakfast table of the archtypal holder of dividend-producing shares.

Gobsmacked, do you know the typical range of choices that are made, about how major corporations allocate their profits? Can you summarise those choices into, say, three to six categories, then provide an idea of where you thinks the money is best spent? Better yet, provide links to validate yourcategories, and further information about the dollar amounts typical of each, for an individual listed company or a group of similar industries.

As one who is fairly ignorant of economics, I would be delighted to have my questions answered in plain language. Shadow Minister has yet to answer the last question I put to him. Perhaps you can answer me in the meantime.

In the early 60s an uncle of mine was complaining that he had paid 9,000 pounds tax, which left him with less than 6,000 net income.

He looked at me as if I were mad when I said I wished I had paid 9,000 tax. With his 5,000+ net I could have paid cash for my 4,800 pound home, which I would be paying off for another 19 years.

I pointed out that I had only paid about 120 pounds tax, which left me with about 1100 net. I was not unhappy with this. I could comfortably pay my home loan, run the car, pay my hospital & medical insurance, keep my wife, & new baby at home, & even afford to race a 16Ft skiff at the sailing club on Saturdays.

I liked my uncle, he had started with a horse & cart, & worked very hard to be where he had a live in maid, a chauffeur/handyman & could buy a string of houses.

I could not imagine even wanting a live in maid, & he could not imagine wasting Saturday, & money going sailing, but it did not stop us being friends.

He was about as rich as most very wealthy today, & I was much better off than my younger kids are today. They are keeping so many useless public employees providing all the "services" I never needed, or wanted, there is no way any of them could live on one wage.

It may be advisable for people to play it safe over the next few weeks, [who live in the areas of Hobart, NSW and the A.C.T] to keep an eye on the bom site for any cyclone activity by the way.

Not an alarmist statement, just a precautionary bit of advice.

The remaining effects of La Nina could land up anywhere and/or everywhere, regardless of cooler water temperatures.

It pays to be aware.

Woops! I forgot to include poor old VIC in the warning too!

I am looking forward to seeing in April, something I would never have contemplated.

Hasbeen's comment brings to mind the maybe apocryphal exchange between F Scott Fitzgerald and E Hemingway -

(F. Scott: “The rich are not like you and me.” Ernest: “Yes. They have more money.”)

(quoted from) http://www.overthinkingit.com/2008/09/02/gossip-girl-season-2-begins-the-rich-are-just-like-you-and-me/

Hi Baz, have noted your views on the VFT before when I raised the subject.

I am a woman by the way, which is irrelevant, and I loved your 'maker' comment LOL.

True, the cost of the VFT is not within our reach for a few years, although it could be done later regardless of our terrain if mapped out and using a european company who have built these o/s knowing how to overcome terrain and stability issues.

A dream of mine for many years Baz, and in all likelihood you are right now, regarding the financial side.

I just read Saul's article and the comments here, and I find myself a little confused.
I was under the impression that the "flood levy" was to be paid for 12 mths from 1/7/11 to 30/6/12 at a rate of $1.00/week for those earning $50,000 - $100,000 and $5/week for those earning $100,001 +!
In my opinion a debate over old or new taxes is rather ridiculous as a levy is hardly a tax!
For those who claim that $5/wk is excessive, I suggest that you may do without that cup of latte for at least one day each week.

The richer they are the harder they scream about money.

Gobsmacked and Shadow Minister - flagrant in their opinions, demure about their facts. - Shame you two didn't keep your oars in on the QLD Flood funding. Or are you waiting for the leader of the opposition to say something interesting on the topic?