Social engineering awakened with a big prize: Victorian budget

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One of the more intriguing announcements in the Victorian state budget last week was the removal of a property tax exemption for gender-exclusive clubs (affecting clubs only for men or women). It was also one of the smallest changes in a large spending and tax budget, raising only about $ 100,000 for the state out of a total revenue of $ 75 billion ($ 58 billion) per year. .

But the highly selective ruling against the clubs says a lot about the budget and the government that produced it – not that it reveals any attachment to the principles of taxation, but because it is a government and a social engineering budget.

Therefore, no stone will be overlooked in the pursuit of its long-awakened goals, including the criminalization of perceived gender discrimination in every nook and cranny.

This is social engineering at a high price, and Victoria’s public finances are in terrible disarray.

The government attributes this to the COVID-19 pandemic, but the rot set in long before the virus reached our shores. State spending and debt were growing rapidly. The pandemic has simply propelled him even higher.

The broadest measure of the state’s public sector debt will reach $ 200 billion in four years, the highest of any Australian state or territory in absolute terms and in terms of economic size and income.

Melbourne CBD skyline (Adrian Malec / pixabay)

Unfortunately the recent federal budget has a lot in common with Victoria. They both face a broken budget situation, but venture into new and ongoing social spending programs that will ultimately make budget repair more difficult.

However, if Victoria’s approach is to be commended for anything, it is that the government at least does not pretend it can increase spending without raising taxes. That is to say more than can be said for the current federal government.

The Victorian budget provides for tax increases of approximately $ 1.5 billion per year. If the federal government did the same proportionately, it would harvest fifteen times as much. But it is not raising taxes at all – in fact, it plans to reduce income taxes in 2024. The income tax cut is desirable in itself, but the government’s spending plans do. clash.

Victoria’s tax increases have been heavily criticized for targeting property and the payroll, but given the highly centralized nature of broad-base taxes in Australia and the narrowness of the tax bases available to states, a state no has nowhere to turn if he wants to. more income. The most telling point is that there would be no need for more income if they were disciplined in their spending.

Previous Labor governments led by Prime Ministers Steve Bracks and John Brumby – in office from 1999 to 2010 – were relatively disciplined in their spending and in fact cut wages and property taxes. The current government, although from the same party, is undoing all that work.

Vintage photo
Cafes on Degraves Street in Melbourne open their doors to customers in Melbourne, Australia, June 1, 2020 (Darrian Traynor / Getty Images)

the gradual increases in payroll tax rates on companies whose national payroll exceeds 10 million dollars are qualified as a “levy” dedicated to the financing of new initiatives in the field of mental health. This is an accounting gadget for presentation purposes.

There is no reason for mental health to have its own source of revenue, and neither are the myriad of other state government programs. The levy is an outright increase in social charges. As the company cannot pass it on to someone else, there will be a cost to the job in Victoria.

the increase in property tax are supposed to target the rich because they only apply above a high threshold. But the government is apparently unaware that most of Melbourne’s sparkling office towers and malls on high-value land are indirectly owned by millions of ordinary people through listed and unlisted real estate investment companies and real estate development companies in which pension funds have large investments.

The increase in real estate transfer tax (better known as stamp duty) only generates more revenue from a totally damaging and overburdened tax which, by general agreement of economists, should be abolished.

Victorians who don’t own or run a business might think this is a good budget for them, but it contains a lot of unnecessary expenses and leads to huge tax issues that will weigh on all Victorians in the future.

Robert Carling is a senior research fellow at the Center for Independent Studies in Sydney, Australia, and a former economist for the World Bank, IMF, and Federal and State Treasury.

The opinions expressed in this article are those of the author and do not necessarily reflect those of The Epoch Times.


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