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The Forum > Article Comments > Free trade focus > Comments

Free trade focus : Comments

By Julie Bishop, published 28/3/2013

However, there are other things that government can do to support exporters and in turn generate and increase economic security.

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Hard to fault the historical record or the critique Julie. However, your side's record, is by no means perfect in this area, with the US FTA agreement a glaring case in point, where the US still retains a huge trade weight advantage, and something that ought to be renegotiated or junked!
We would likely get better terms of trade with China, India, Korea and many other parts of Asia.
Despite your rosy depiction, our manufacturing base is still mugged by the high AUD, remains in the doldrums and needs urgent remedial action.
Germany stands almost alone as the stand-out European economy, or stable economic Island in a sea of financial chaos.
And, that's down to the fact that a pragmatic leadership refused to join the rush to convert their economies to service based and instead, chose to not only keep and rely on a manufacturing base, but quite hugely embellish/advantage it with innovation and R+D.
Korea has gotten this message and is now spending around 5% of the GNP on R+D!
I don't believe either major party has anything like a solution. With your side planning to further contract the economy, by living within our means; those means hugely compromised, by quite massive tax avoidance! Continued.
Posted by Rhrosty, Thursday, 28 March 2013 9:19:13 AM
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Agree that the carbon and mining taxes be repealed, but only as part of quite massive, long overdue tax reform, that jettisons the current tax collection methodology in its entirety, and replaces all that convoluted complexity, with a single, stand alone, UNAVOIDABLE expenditure tax; collected via the banking sector.
Set at just 4.8%, it will raise considerably more revenue, end the destiny of demography, remove/fix the current structural deficit,and build annual and ultra reliable surpluses, without in any way whatsoever, mugging or contracting the economy. Just the opposite!
Look, company tax net collection currently ranges in real terms, between 1-4%, with around 40% of our international guest corporations, reportedly, paying no company tax to anyone.
The trade off in the proposed reform, would be the removal of all compliance measures, which currently rips around 7% from the averaged bottom line.
This reform, would, after quite massively increasing net tax revenue, improve the average bottom line by around 30+%, and household disposals by an averaged 25%; making a non-contributory 15% super, immediately available/doable. And, all courtesy of current avoiders! JUSTICE!
With a single stand alone expenditure tax in place, the tax rate alone, can be marginally adjusted, to much more immediately control inflation or stagnation; meaning, the interest rate component can be permanently adjusted downward to historical lows, or until the AUD falls to its natural value, around 65 cents.
After that, very low cost publicly provided power is the final key, that will send the high tech industries of the world queuing to relocate to these shores.
[Read, Thorium, cheaper than coal.]
And given they will have significant international markets and marketing mechanisms well and truly in place, a quite massive boost to internal incomes and tax receipts; and, value added export commodities and markets!
It's clearly not a case of can't Julie, just one of won't!
Or if you will, the constraints inflicted, by a self imposed ideological straight jacket?
Rhrosty.
Posted by Rhrosty, Thursday, 28 March 2013 10:09:53 AM
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Rhosty, that was a very interesting couple of posts. I reckon you should write an article on it. Put it out there. I would be interested to know more about what it is and how it would be collected; also you should cover the downsides to it as well.

Also, if it would result in an increase of tax receipts for government, surely it should be set at a lower rate? You're not saying we don't have enough of it for gossake are you?
Posted by Jardine K. Jardine, Thursday, 28 March 2013 7:56:23 PM
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JKJ, If you visit the Graham's archives, you will see I've written a veritable article.
It will collect more net tax than is current.
Necessary, given a structural deficit of at least 30 billion per. Conversely, we can do what other nations have done and kick the debt can down the road, until it comes back to bite us in the financial rear end.
If we collect a fairly substantial surplus, and then invest that surplus in a sovereign fund, our economy and financial position, will simply go from strength to strength!
The Govt will not have to borrow any money, meaning more funds available to private enterprise and at lower rates.
Given no need for any reconciliation, we've as good as added 400 billion to treasury coffers, given money coming in is immediately available, rather than having to be held up to twelve plus months!
An expenditure tax is collected as money exists any australian account.
Most bank main frames are already programmed to lift various sums, i.e.,fees charges, stamp duty.
Adjusting them to automatically collect money and forward it to treasury, should be just a matter of writing a program.
The black economy will be brought into the net, when we fully transition into a cashless economy.
The extra income is raised by including current avoiders, all of them, in the net.
The unavoidable nature of the proposal means business houses can recoup around 7%, which is currently ripped from the bottom line by compliance issues; which generally, exceeds the proposed tax take. The tax rate can be marginally varied, to alone control inflation/stagnation; meaning, interest rates can be permanently lowered until the AUD reaches it natural value, around 65 cents, to turbo-charge the non mining economy.
Can you imagine life without fuel excise, PAYE, PAYG, Payroll tax and the ubiquitous cascading GST etc/etc!
The states would lose the GST, but get more back as a direct federal funding model for education and public health.
Downsides? Well there will be some for tax avoiders, the ATO, which would along with most tax practises, be rendered redundant.
Rhrosty.
Posted by Rhrosty, Friday, 29 March 2013 10:35:41 AM
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Footnote: We do need to collect more net tax! Because, for decades we've systematically and seriously under-funded infrastructure, to the eternal detriment of our economy and lifestyles.
Imagine what very rapid rail, would do for western Sydney. And rezoning some of the necessarily resumed land along the line to residential would all but pay back necessary capital outlays!
Yes, and a few dozen land holders would be seriously p-ssed off! But, wouldn't have much of a case, if they received full market value for undeveloped rural land?
Alternatively, tunnelling under developed areas could be cheaper than land resumption.
A very rapid rail link along the entire eastern Brisbane/Melbourne corridor, would negate the need to build more airports.
Rail remains far and away, the most economical means of bulk freight forwarding.
Collecting previously avoided tax, would make these and many other projects immediately affordable, including publicly provided, carbon free, cheaper than coal, thorium power.
We are blessed with embarrassing riches of the stuff!
The Govt owner doesn't have to get into the business of running businesses; just tendering out contracts, the way they've always done!
Some of which could be building contracts, labour, service and management provision!
Rhrosty.
Posted by Rhrosty, Friday, 29 March 2013 11:14:13 AM
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Rhosty, what is there to stop the black economy in your proposal ?
It would mean that people may be more intent on keeping out of the official system ?
Have a completely cashless system may work, although bitcoin has been
suggested as a way around that.

Then the town of Totnes in the UK has its own currency.
You said;
Imagine what very rapid rail, would do for western Sydney.
And rezoning some of the necessarily resumed land along the line to
residential would all but pay back necessary capital outlays!

The land along the line is already built upon. Anyway the distance is
too short for the HST. We have already missed the boat for the HST as
the cost for the distance is to great and the population is too small.
We could, just, afford a fast enough system, say average 150 kph.
Not sure how aware you are on this HST subject but it has to be
almost a line of sight construction and dedicated to HST passenger trains.

I don't think in a time of decreasing growth that it can be afforded.
We will have our time cut out to avoid going backwards.
Posted by Bazz, Friday, 29 March 2013 1:39:22 PM
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