Page 644 - Week 03 - Thursday, 15 March 2007
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a new utilities tax, which will no doubt be passed on to utility users, which is basically everyone in this community. The government has also introduced a new fire and emergency services levy. One would like to believe that this levy will collect money for improvements to emergency services. But that is not exactly how it is going to go. It will go into general revenue. It is another disguised form of taxation given a fashionable name and one that, on the face of it, sounds almost reasonable, except that you know it will be absorbed into the clutches of Treasury to fund all manner of activities.
The effect on households is important. What this means for Canberra households in a city that is dominated by salary and wage earners is quite important. If you are a householder down in Banks, then, according to Treasury figures, you can expect to pay about 25 per cent more on your rates bill this year. It is about $191 on average. It is $191 net of disposable income that you will not have. But you might have to earn as much as the high $300 mark to have that money available. Some other suburbs can expect to pay an average of $200, $300 or even $400 more this year.
Of course, you cannot expect any relief on your utility bills. You can expect them to go up, too, since the utility providers are also paying more in taxes. People will look to the future and ask themselves: what about the future? What if I work a bit harder but become more productive? If my wages increase, maybe I can outrun the government’s increases in taxes and charges? I would say to you: good luck, because you will be running against not just increases due to inflation but automatic increases in real terms, and that is the big difference with these tax measures.
I called around Australia and I could not find any state in Australia that has gone down this road of wage price indexation in relation to its revenue base. I was met with disbelief by people at commonwealth and state level. They said, “It is extraordinary that they can get away with it.” I said, “When you have got a majority, you can what you like.”
These are the impacts that families in the territory are starting to feel. As the full impact of these charges goes through and families in the territory understand how the deficit is being reduced, I think that many families in this territory will find that the pain of this tax regime is something they can relate to. The fact is that people will be able to do a bit less of going out to movies or to dinner. But they will be able to visit some of the wonderful landmarks, such as the arboretum or the new statue of Al Grassby. They will be able to see where their money has gone. If they cannot spend it on their own pleasures, at least they will be able to see what the territory government is so prudently doing with the taxes they contribute.
This is the great Australian dream under the Stanhope government—lofty speeches about concern for housing affordability and then increases in Canberra property rates, averaging 18.63 per cent, according to Treasury figures. That is over 18 per cent, with more increases in real terms to come.
Aside from the specific effect on individuals, there are wider economic effects from increases in taxation. It is basic economic theory that increases in taxation reduce incentives and thereby stifle production. That is when people lose their money to taxation. They also lose the product of whatever it is that they would have spent it on.
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