I must be missing something here. What exactly is the point you are making Mr Gruen, if you would be so kind as to dumb it down a little for me? You expend a great deal of energy pointing out the obvious, but fail even to establish a working straw man to demolish, let alone invite dissenting opinions.

It has the merit, I suppose, of not being a special pleading for a pet project.

They should increase the tax on cigarettes to about $50 a pack so people can help repay the burden on society they will b later on in life.
If people can't afford it good.

You could do the same thing with dope - legalise and charge an abosulte fortune in tax per joint. Drug runners could then be prosecuted for tax avoidance, not drug trafficking - which is how they got Al Capone!

t.u.s

Such a well written and argued opinion piece that I was inspired to register in order to say so. A very enjoyable read.

Yes pollution should indeed be progressively taxed; but that argument might best be left for another day.

Thanks Stuart. Perhaps you can tell me a little about what made this piece interesting for you? I have now re-read it several times, and still cannot make head nor tail of what it is trying to say.

The summary in the feedback section states "Nicholas Gruen argues for progressive taxation on 'status' or 'positional' goods."

His article states "You don’t have to believe in higher taxes overall to think that taxes should be progressive - with rates rising as a proportion of the value of what is taxed, whether it’s income, land or cars. And that’s just what our income, land and “luxury car” taxes do."

So, is Mr Gruen arguing for something that already exists?

He summarizes with "Tax cuts usually involve lifting thresholds at which higher marginal rates cut in rather than cutting the top marginal rate. So they should. Should we defend this tradition of the “fair go” against its many enemies on the grounds that it’s fair, or that it’s efficient."

Where are these "many enemies"? None is mentioned anywhere in the article.

So we have nearly a thousand words that defends a position (progressive taxation) against non-existent - or at least unnamed - enemies. Am I alone in considering this an insult to our intelligence?

I read this as an argument for progressive levels of GST/sales tax/etc based on perceived luxury level or social value of the item. Somebody decides certain items are luxury or status items so those tax on that item is at a greater rate than on a similar item not regarded as luxury or status.

I'm personally not much of a fan of progressive levels of tax anyway, it take's no account of the effort which went into incurring the tax burden. Why should the person who works hard to achieve a particular financial outcome have a higher tax burden than someone who focus their energies more towards recreational interests.

The issues Nicholas discusses hit problems in a couple of area's (and I have not tried to think of all the issues)

- Who decided's what is luxury or status. We each have different interests and priorities in our lives so what is a luxury to you might be important to me and visa versa.

- The proposal takes no account of the choices people have made to get to their luxury purchase. Should the person who puts everything into trying to achieve an important goal be penalised compared to someone who spreads their energies/finances out across a large number of low status items.

Stuart,

Thanks,

Perecles,

Sorry for insulting your intelligence. You are correct. The article is arguing for something that exists - progressive taxation.

You may have noticed a large number of people who are arguing in favour of cutting the top marginal rate of tax (rather than simply raising the threshold at which it cuts in). Such people include business lobby groups, a range of Coalition politicians and various others. I'm arguing against them.

The luxury car tax is also regarded as an 'inefficient' tax for instance by the Productivty Commission which argued in 2002 "There is a case for abolishing the luxury tax". My article argues that there's a case for keeping it.

Robert,

You're right. Taxing luxury goods is rough and ready. A person of relatively modest means might have a big thing for Mercedes cars and save for years to buy one. So there's some unfairness there, balanced I hope by the fact that for most people the taxation is efficient and fair. Tax is always like this - never perfectly fair.

It is a pity for instance that the tax debate of 1999 and 2000 was had along the lines of the shortcomings of the WST - as if its replacement didn't have shortcomings. It does - and plenty of them. It sounds harsh, unfeeling etc and the tabloids can have a field day with it, but tax is a rough and ready business.