I just saw this: http://www.couriermail.com.au/news/queensland/rudd-governmen…
"… Prime Minister Kevin Rudd will whack a 0.05 per cent levy on all bank, mutual bank and credit union accounts up to $250,000 to help boost his own Budget bottom line."
He's certainly just lost any chance of getting my vote.
"The nation's banks are poised to cut interest rates paid to savings accounts to soften the hit from the levy."
http://www.businessspectator.com.au/news/2013/8/2/financial-…
Banks will use any excuse.
They will probably use it as an excuse to put up mortgage rates and sack heaps of staff too.
Just like the mining companies threatened to leave Australia if the mining tax got in.
Rudd's just got to stick to his guns and ignore all the whingers.
You really don't have any clue how business works - do you?
Do you really think these costs won't get passed on to the end consumers?
I think he has a clue.. i think we all have a clue.. the banks are meant to absorb it.. the fact that they WILL pass it on is not the governments fault. If people want to be angry about it, be angry at the banks.. the profit machines that done give two tosses about their customers.
As much as I hate banks they have a responsibility to their shareholders to make as much money as they can - Of course this additional tax will be passed on to consumers. The best thing to do if you aren't happy about this is to buy a few bank shares and see life from the other side of the coin.
This is what's wrong with the world. We give a prime directive to companies/corportations and disregard anything else…like morals, responsibility to your environment, responsibility to the planet; all ignored in the name of profit and sanctioned because it's the entities prime directive.
Our prime directive is to continue as a species and reproduce. But we don't sanction rape in the name of this.
Unrestrained capitalism is as bad as anything else when taken to extremes.
I 100% agree with you, but seems that many people around don't get that at all.
When the government discussed carbon tax, I spoke to many people who were happy for the companies to pay, pity they all scream now when it comes to paying electricity bills.
I doubt any of that money is used to fight CO2 emissions, as much as I doubt any of the 0.05% tax will be really used to insure deposits - not to mention, this amount is way to small to provide enough protection to cover off any potential write offs caused by new, upcoming wave of financial crisis.
How about superfund accounts (there are ones based mainly on term deposits and a lot of balanced ones have term deposits as well)? I am 100% sure I won't be able to survive with my super when I retire… and now the government wants to take another cut? My super is way way below 250,000. However, the fund itself probably has exceeded that amount… so I will end up being affected??
Can't the government take 0.05% out of the interest rate tax for the insurance, rather than take another 0.05% from people?
This seems like a complete jib, until the moment your bank goes belly up, then it would be the best money you ever spent.
According to The Age:
It's not a perfect user-pays structure, because the banks may not pass the charge straight through to deposits. They can lay it off in other places, too, including their lending rates, and their decisions will, as always, be influenced by how heavily they are competing.
Therefore, one possible situation I can think of…. the banks could increase the home loan interest rate instead (or use the 0.05% levy leads to higher lending cost as an excuse to bump up the interest rate).
What the government is doing is essentially providing insurance, if something goes wrong they are going to have to pay out a lot of money. Name me a private company that gives out insurance for free.
Also good to keep in mind that this is just 5 basis points, that's absolutely miniscule. Say you had $100,000 in a bank account at 3% interest. Over a year you would earn around $3000 in interest, and pay deposit guarantee levy of $50. $50 on $100,000 is nothing. Even if you had just $10,000, that's only $5 in deposit guarantee.
And this isn't going on your tax return by the way, the bank will do it. Who knows, it's kinda competitive out there especially with the high interest accounts. It might end up being even less to you.
Plus I should add, the IMF, RBA and a lot of major finance organisations are saying this is the way to go, they are recommending all nations do this so that the banks can be bailed out with their own money should GFC mk 2 arrive.
So all in all, I'm not at all fussed about the bank levy, it's like 5c in $100.00. I'm honestly more worried about the 1.5% tax on businesses Abbott is planning to impose on all businesses, or that Direct Action plan of his which Turnbull said would cost tens of billions of dollars on top of what has already been budgeted.
It's capped at 250k so that those with large amount of money, and by your reasoning can afford to lose it, aren't bailed out by a levy on those with small savings.
In other words, exactly 180 deg from your 'reasoning'.
Mind, personally I'd have put the levy on bankers salaries, bonuses, and the banks' dividends - just to make sure the pain falls where it should, with those you expect to stuff up.
Why is it capped at $250k? Because the deposit guarantee is only for accounts of up to $250k.
Needless to say everyone will be paying it, because millionaires etc are smart enough to want to cover their risk and do divide their money into multiple accounts of no more than $250k in each so they can qualify for the deposit guarantee for each account :)
yeah but why cap the levy at 250,000 - if its insurance for everyone why is it regressive? why do only those with the least amount of money have to pay it? the idea of a society is for people to share - can't see how compulsory bank tax on the poorest accounts at a bank is sharing responsibility for a bank going bust? Why do those who made the bank fail not have to pay back their salaries for example?
Also I'm unsure why anyone whose sane would think people with millions in a bank would lose all their money when they would be told to remove it long before the bank was allowed to fail …….. like in Greece. people here moan about taxation but target the poorest to pay the highest percentage of their income - just another example of the myth of society.
In Australia the bigger the account the higher rate of interest the bank offers - so those with the most amount of money are paid the highest interest but do not have to pay any levy - I mean do you really think that's right? Screwing over pensioners so Rudd and his cronies get even more interest?
You don't seem to get it.
Accounts over 250k are not insured. If the bank fails, like in America during the GFC, then those with over 250K are not insured and lose all their money. Those under 250K have their money refunded to them by the government.
It's protection for the poorest. And a higher interest rate on 250K is in line with more return for greater risk.
Still missing the point mate, it is $250k per institution. If I had a million I could put it in four different banks, $250k each and all of it would be covered. And as I said earlier, these millionaires are smart, they want their money protected so they'd be splitting their money across banks to make sure it's guaranteed. If they want to put more than 250k in an account then fine, but they're taking the risk that if their bank fails they won't get their money back. Pretty big risk to take!
The poorest Australians don't have any savings. They live from week to week. I doubt you could save money on a government pension of $16,000 a year.
Just a thought…if someone has $260k in a single bank institution, and if that bank fails, will they get $250k back as part of the guarantee and lose $10k? or will they lose everything because of the total amount exceeding the $250k cap? My thought is the former cause the latter deserves a slap on their policy if that is the case.
12% on a million plus???? I don't know of any Australian bank offering that in many a year. Well over a decade in fact. Care to name the bank, cause I know a few aged people who would happily jump at that to put their retirement savings into.
As far as l know the government guarantee up to 250k so I say the former case will apply.
I would be too concerned if this is not the case.
haha, I can assure you I wrote this myself, nothing to do with the ALP website, I'm just a finance and economics graduate who can't see anything terrifyingly wrong with this idea :)
To put all these negatives into words - enforcer103, that was a stupid comment
Aviator, I see your point of view, except I understand how it'll be an insurance. Could you elaborate a bit more on that?
Minimal as it is, this could have a lot of negative side effects to the economy if the Coalition runs it's scare campaigns effectively.
I'm studying Econs and Commerce at the moment so I find this an interesting discussion :)
Hey cpho, was trying to simplify the explanation. Govt is providing a form of insurance in the way that if the money is lost (eg if the bank fails), govt has promised to give that money back to the deposit holder, which is in essence what an insurance company would do.
I would use a different example and say that the insurance for banks is to prevent a run on the banks. Similar to the recent Cyprus banks episode.
Let's say that some bad data comes out and it turns out the mortgage delinquency rates have sky rocketed to 5% of all loans on the books for a particular bank. Assuming that the bank's risk models only accounted for a max of 3% delinquency rate and now they can't figure out how to raise funds to pay their actual creditors; banks do not keep loans to deposit ration of 1:1.
Should this news get out, and there should be no deposit insurance in place, then the logical thing to do for all savers at the bank is that they should get their money out in case the banks don't have enough money to cover their withdraw. This accelerates the bank's fall.
At the same time, anyone owing money to the bank may see the same thing and act differently. That is, stop paying their mortgage, or maxing their credit card, as if the bank will go under, the mess that will result may work towards their advantage. Although this behaviour was witnessed in the U.S. I'm not sure if legally something would prevent Australians from doing this.
With those two scenarios, it is very beneficial for the banks to have an implicit guarantee from the Australian Government regarding most banks' too-big-to-fail status. The general consensus from domestic and international governing bodies are that the banks should be explicitly paying for this guarantee, thus the "new" policy.
Exactly. Good post.
The potential argument against the scheme is that the presence of a government guarantee for some financial service providers and not others would skew the market against non-bank providers such as Colonial, managed funds etc.
But its always been acknowledged that banks should be a safe place to leave your money, and that there should be a clear dividing line between the banks and the casinos.
Why make small amounts of large profit when you can make large amounts of small profit. I would rather have a choice to OPT out and take my loses if the need arose.
The example of $100,000 costing $50 assumes a one-time deposit. If, for example, I want to move some money around several times a year to get better interest rates (which from what I've read, a fair number of OzBargainites do), then the $50 is paid each time. That adds up.
This brings to mind a few issues. Firstly, could this inhibit competition among the banks because every time a person moves their money, they have to consider the additional cost. (aka "switching costs")
Secondly, if the levy is claimed to be an "insurance", then why should we have to pay it multiple times by moving the same money around seeking a better return? (Let's at least call it what it really is - a transaction cost.)
Of course, if you're a business moving a lot of money around transactionally, then this picture is multiple times worse. Your $50 could turn into thousands fast.
Just food for thought.
Isn't it a % "tax", so it'd be pro-rata, not a lump sum tax?
So, if I had 100k in bank A and switched to bank B in the middle of the year, I would be paying the 0.05% of $50, half to bank A, half to bank B.
Cool. I hope you are right, but I've heard nothing about it being pro-rata, nor can I find anything about it from Googling.
Also, if it is pro-rata, that'd mean the tax could only be properly calculated at withdrawal (ie., how long has this money been held with this bank), not on deposit, making it a "withdrawal tax" (or a "holdings tax" at the very least - well I guess "deposits" are "holdings"). This also makes things more complicated, so I can see why banks are complaining about the administration burden.
Does this also mean the deposit gets charged the tax each year, rather than once off? That actually makes more sense as an "insurance", but that's still a less favourable picture. "Hey, you know that bunch of money you have, we're going to tax you on it every year just for having it." I thought that's what income tax on the interest earned was all about.
Anyway, thanks for the heads-up, cpho.
Oh…. zero-point-zero-five-percent not five percent, here I was really worried.
5/10000, but will this money be kept or spent?
Unfortunately a one-dimensional analysis typical from university graduates these days. Analysis seems to mean reading an article or report and regurgitating it almost verbatim without any thought inputs in between.
It is completely reasonable that the government imposes a charge for an insurance-like service that it provides. However the insurance scheme is compulsory - there is no ability to opt-in or opt-out.
Until now, there has been an implicit cost of this insurance - a contingent liability that will cost consumers (as taxpayers) only if a bank had financial difficulty. This new financial charge crystalises a cost on this compulsory insurance, a cost that everyone will now be paying because there is no choice to opt-in or out. This is typical of the central planning committee of Canberra who either do not accept that individuals are in the best position to make their own decisions about their own assets and situations, or do not trust that these individuals will make the correct decisions for themselves. This subverts the idea of economic liberalism where consumers determine what it is they need, and is pure socialism where the government decides what everyone should have.
The other issue is there is absolutely no incentive for a financial institution to lower their perceived riskiness and stregnthen their balance sheets, nor for consumers to pick lower-risk banks over higher-risk banks, because the charge is the same flat rate regardless of which institution you have funds in. This subverts the system, penalising those in lower-risk banks who often pay lower interest rates and subsidising those who are chasing higher returns with higher risk banks. Insurance is a risk-based game and needs to be costed appropriately; that is, if the consumer opts to be insured in the first place.
And in response to the idea of an implied cost because of the 'too big to fail' banks that would necessitate government assistance in the case of financial difficulty, the fact that the government offered an affordable insurance scheme to consumers who could opt-in would negate significantly the feeling of a moral obligation for the government to assist all those who lost out.
This is along the lines of what I would expect from a good finance and economics graduate - the application of financial understanding and economic theory to identify the sound theoretical underpinnings as well as the serious shortcomings of policy.
+1 mainly for this
"The other issue is there is absolutely no incentive for a financial institution to lower their perceived riskiness and stregnthen their balance sheets, nor for consumers to pick lower-risk banks over higher-risk banks, because the charge is the same flat rate regardless of which institution you have funds in. This subverts the system, penalising those in lower-risk banks who often pay lower interest rates and subsidising those who are chasing higher returns with higher risk banks. Insurance is a risk-based game and needs to be costed appropriately; that is, if the consumer opts to be insured in the first place."
No need to be derogatory and generalising qazwsx. This is OzBargain, not an academic journal. Everything you said was, to me anyway, already implicit in the original post.
So how does the average consumer assess the riskiness of a particular bank?
Very well said. At least Rudd has the decency to reveal his plans and appear on live shows like ABC's Q&A.
Abbott is running scared and only appears on shows with a right wing agenda and gives press conferences without taking questions. He has a $70 billion black hole to fill and this will likely come from selling off or decreasing funding in public services like healthcare.
This is a good policy by Rudd and protects investments for everyday Australians unlike the Liberals who care about their big business and rich millionaire friends.
Rich millionare friends? Like the Rudds?
Abbott has a $70billion black hole? The labour government have created a $200billion+ black hole and its only that low because they've delayed progress on some of their promises for a few years.
We need a hard line budget to cut back all of the spending, not someone who wants to keep spending more and more and hoping that tax revenue will suddenly skyrocket. There's a reason that although a surplus was promised that we've been going backwards, it's because expenses are under estimated and tax income is over estimated.
Basic rules of budgeting wether its at home, buisness or running a country; Ensure that you have a steady income and spend within your means while trying to build equity.
Our current government is following the U.S. methods of spend like crazy and then blame the rich for having money while the poor and the government are both getting poorer.
I remember a $20 billion surplus at the end of the Howard govt. He sold off every asset we had left to get the budget back to that. I don't think there is anything left to sell now if we are ever to get back to a balanced budget, let alone the prospect of a surplus. We don't have any more Telstras or Commonwealth Banks, Qantas etc to sell. I hope someone can remember/find an asset for us to sell or our grandchildren are going to be paying interest on debt that exists from the current govt's era.
I see an interesting analogy here… the low income earner who wins lotto and is broke again in 2 or 3 years. There is a reason the rich are careful with their money, they know it can disappear all too quickly in bad times. Smart people are smart with saving their money (Hello Ozbargainers!).
We should start up the Ozbargain political party!
There is Medibank Private. The Tories have said that they will sell it if they ever get back into power. It brings in about $200 million a year for the governments bottom line.
I honestly think that they will start eyeing off Australia Post as well, maybe not to start with, but perhaps the election after next.
Good riddence to Australia Post.
It brings in about $300 million a year in profit, or about $30 per taxpayer per year.
Its funny, that the revenues are down… as most of Australia's income producing assets were sold off to pay for the baby bonus of the Howard era. And it seems that the states are all following the same mantra - of selling off income producing assets (e.g. utilities such as Power) and now they complain
a) they have no money
b) they have no way to control the market place
Its a shame, as those govnt organisations actually provide a fair amount of stability to the economy, by not having to chase super profits, and being able to force competitors to act ethically (sometimes, if the govnt company is doing the same).
Libs will sell of Medibank Private - guess what will happen to our Private Health Care premiums… i'll give you some ideas of what happens when things get sold off: power, water, gas, mining, telstra, CBA, CSIRO (is a laughing stock in the scientific community, but not as much as ABARE), public transport, PPP toll roads: in all those the consumer doesn't win and the Govnt lost an income producing asset: double hit!
Good Policy! Agree 100%! Should have introduced long ago.
Sounds a lot like the old FID that was abolished when the GST came in. I'd rather see regulatory controls on banks to ensure they behave responsibly rather than a levy which will just get passed along to Joe Blogs consumer anyway.
Agree. I liked the idea of splitting the banks into 2. One division to carry on "regular" banking activities, with tighter controls on lending, and the other to be involved in derivatives and trading and all the other high risk activities. If we had that we wouldn't need to hit the depositors to provide insurance for the banks less stable investments.
Guy I keep all my cash in 100% offset account. Am I going to be hit with the interest fees of Mr Rudd?
Do you have more than 250K in your offset account?
While the levy doesn't appear to be the worst thing in the world it doesn't make sense to say that this is being done in other places.
The government guaranteed bank deposits because it had to for global financial reassurance - not because our banks were in any way as vulnerable as other banks.
The best insurance for the banking sector is not a levy - it is good prudential regulation. And we already have that.
Thank you for your common sense, can u replacethe flogs in cCanberra.
Indeed I have just been thinking. Now the government is actually funding the insurance, does that give the banks more excuse to be reckless with the money people put in? I wouldn't want that as the result.
The banks have always had de facto government backing. There was no explicit government guarantee behind Freddy Mac, Fannie Mae, Countrywide, or any of the rubbish loans that they served up and then sold all around the world, but ultimately the US Government felt that they had to bail them out anyway.
They will try to chase higher yields (through riskier investments), but no worries, if they screw up the gubberment will be there to bail them out. Feels like history is forever repeating itself.
No. That's what Basel III is here for.
If you believe that is going to work I have some fine flying pigs here to sell you.
What's the problem? They're implementing the recommendations of the financial regulators, which makes a lot of sense. Even better would be a bank super-profit tax which might make them a bit more civic minded.
Think about this, if the Commonwealth Bank went belly up we would need to have been paying this tax for 400+yrs to protect everybody who had money in the bank.
Exactly. Anyone that thinks government would actually repay people who lost their savings due to some bank crash - probably also dances with fairies at the bottom of the garden. They're doing it to boost their own bottom line - and hoping (gambling) on the likelihood they'll never have to pay out. If it really happened, they'd talk their way out of repaying, 100% guaranteed.
You mean like how Iceland protected their citizens but not foreign banks etc that had lent money…nope, that would never happen, except for the time that it did happen.
Everywhere isn't the same as the US where the money protected the rich lenders and fucked the homeowners.
29 replies on a 0.05% tax maxing out at $125 a year to insure your savings incase the financial world falls apart, yet not even a thread regarding the changes to fbt which has a much bigger effect for those wise enough to utilise it with their employer.
I'm amazed!!!
You mean those earning enough to obtain said perk from their employer. I think you'll find that being one of the major reasons it's not being discussed here.
As for the FBT issue, I find this article quite good at getting through all the hot air: http://www.canberratimes.com.au/business/a-warning-for-googl…
Those earning enough? What do you consider 'enough' to obtain said perk?
In every case at my work with those salary packaging a car, are significantly worse off - I've ran the numbers. And we're talking guys on 50-60k… I would've thought this would be a fair proportion of ozb?
Nonetheless, my comment was to try and put it in perspective. It's 0.05% to insure your money against the world falling apart. Is it really such a bad thing?
It's 0.05% to insure your money against the world falling apart. Is it really such a bad thing?
If it really did that - maybe not. But I really don't think it would prevent anything. If any major bank here collapsed, you can bet MORE than one would. Any government guarantee would quickly evaporate, with a feeble excuse. ("Sorry - we really did set up the scheme in good faith intending to pay, but honestly, we just can't pay you all back that much money.")
So if it's not really protecting us, then what's it really for? As is the case whenever politicians are involved, the answer is it pours money into government coffers - behind the smoke-screen of "consumer protection".
(It's just like the increase in compulsory Superannuation percentage. First they allowed self-managed super funds - then they realised they couldn't access all that lovely money for government-funded infrastructure projects. If they cancelled SMSF so soon to get access to that money again, there'd be an uproar. So they do the next best thing… Increase the compulsory percentage of super contributions to make up for the loss to SMSFs.
(I've voted mostly Labor in my life - in case anyone thinks I'm down on them just because I vote Liberal.)
It's to protect against a bank run. Interestingly, the guarantee may never actually have to pay out anything to give this sort of protection - the fact that it merely exists could be enough to help an economy in a dire situation.
Lol. You seem to think that super from funds is available to the government. Super funds invest in a range of financial instruments - bonds, local and international shares, fixed interest etc etc. The government only gets access to those funds via bonds and similar issues and they have to repay the loan (bond) with interest at a nominated date. A real family man would do some research before sprouting nonsense. A lot of different accounts currently offer no interest and no fees so banks are going to have to absorb the fee. The big 4 can afford it. If you're unhappy with what they offer look elsewhere. There's plenty of competition.
People don't comment because they don't understand. FBT is not the easiest tax to understand.
I will say though as a tax professional with good experience in FBT compliance and with how cars are treated under FBT that most of the commentary has missed the point about the change. Apart from the vested interests (govt, car industry, leasing co), there's actually been very little said about why businesses are so unhappy about the change. And in my opinion, they have a point.
Just because its published in a newspaper doesn't make it factual.
Can you enlighten us with the point? Yeah so far I have only been reading the discussions on the paper and saw the arguments from both sides of this "tax rort".
Maybe for a separate thread though.
This is the full story…
FBT Tax Concession on Car is concession available to car buyer for those who work in Govt or in Private/Public companies.
The tax used to be dependent on kilometre thresholds. The more you drive, the lower the tax. Some people think this was open to abuse (ie: Greens and eventually Labor who was in desperate need for cash grab) but the truth is, the kilometre threshold was there because it was based on an ASSUMPTION the more you drive, the more business kilometre you do, hence the lower tax. The Govt assumed we, the citizens are corrupt so cannot be given that assumption. The assumption was made in order to simplify the FBT administration. As you stated, this is not an easy tax to understand.
In 2011, Wayne Swan, who was desperate for quick cash grab, decided to kill the thresholds and just implement one kilometre threshold with one tax rate - 20%. This is to address the perceived private kilometre abuse and also to further simplify the FBT administration as it only used one rate.
Now that KRudd thinks its a rort, he is effectively saying what Wayne Swan was doing was a tax rort. It was unfortunately, the only part of the Henry Tax Reform implemented and now with KRudd's changes, the Henry Tax Reform is only as good as a door stopper.
Now for the crux, the FBT car concession was originally designed 20 years ago to ENCOURAGE buying car locally. It also designed to limit the cost of the public sector by substituting salary (cash) with BENEFIT (ie: Fringe Benefits). Thus, the majority of novated leases are for… those who work in Public Sector (ie: Hospital, Non-Profit).
Now the concession is killed, they would have to pay people more cash if FBT concession is now no longer there. Imagine hospitals whose budget is already stretched. It also lowers the DEMAND for new car sales (ie: lower car manufacturing) because there is no longer incentive.
So this is why Novated Lease companies sack people first, and next will be Car Dealer employees, and next Car Manufacturer. Do we need this?
Bear in mind, the tax CONCESSION is a CONCESSION, so it gives you partial benefit. In other words, the govt probably doesn't collect as much tax (it still does but reduced) but it created significant demand/support to the industry. You collect say $3k in less car tax but collect much more through PAYG because of higher employment and GST (through higher demand).
This is why businesses are unhappy. It adds compliance cost (the fact Krudd wants people to use Iphone Apps to track kilometre shows how ignorant he really is) and for car industry, it killed demand.
Hope this helps
It's a rort and those who have availed themselves of it should think themselves lucky that it wasn't shut down LONG ago. Eventually a brave government will also do something about trusts and the super perks most of us have enjoyed in "the good times". It's way past time that the middle and upper classes got off the government teat.
@Burningage - thanks for the explanation. I guess like all policy changes the opinions would be divided, depending on whether you are one of the beneficiaries.
Well that "rort" has now killed the Novated Lease industry, reduced employment in the car deal industry and soon, reducing employment in car manufacturing.
If that's what you called "lucky", then well done. You have just condoned adding to family misery.
@burningrage, two points:
Continuing taxpayer funded subsidisation of packaging (for private use) to help stimulate the domestically produced cars may have been relevant 20 years ago, but is arguably irrelevant now. The criteria don't (cant) narrow down to locally built cars, so people are buying imported through packaging as well.
You say the government "probably doesn't collect as much tax" from the concession, "but collect more in PAYG because of higher employment and GST". I don't know your credentials, but can only assume that treasury and people with all the data must have modeled and found otherwise. Also the GST is an expense that the business can deduct on most vehicles expenses (hence it benefits them) so isnt a source of extra revenue for the government.
Adding to family misery - what a load of tosh. There is no lease "industry" as you call it, just a few companies offering services on the fringe of tax laws. They come and go like bottom of the harbour tax schemes because they were always on shaky ground to begin with.
Your alarmist rubbish that this small change will markedly affect the car industry has what basis precisely? Markets always adjust and the notion that it's a good idea to allow a few taxpayers access to tax breaks and that we shouldn't crack down on them is just puerile. The same ludicrous arguments are rolled out about loss of income and jobs when environmental issues are concerned in other areas of the economy.
So a foreseeable big recession is coming home, that's why they're trying to impose a levy in case of bail out. They should have done this years ago, stop relying too much on resources. Also impose Carbon tax just ridiculous inflating in prices and cost thus lower consumer confident and this should never happened. Asylum seeker should have been stopped because due to its cost mounting. Anyway a deflation will occur otherwise we just can't compete with the rest of the world or just hope a lower dollars will help but this will make consumers suffer due to high cost of fuel and all import goods and products .. A tobaco tax just make things more worse as fake and illegal smoke will be available on streets plus mental illness and violence increase without doubts ..
@ donnyta
Geez stop reading News Limited
Sorry Snappy1234, I have never read even one New Limited article. This just based on my observation and experiences. Unfortunately, we don't have any good politician since Bob Hawke, Paul Keating, John Howard. Most of them now just incompetence or low Iq
this government is absolutely stupid. and for people to even vote them in next election are stupid. over 200 billion in deficit - 30 + each year since in government, future fund used up, carbon tax - putting up the price for the poor so they stay poor. interest rates are amazing low - great for mortgage holders - what about the baby boomers which rely on interest, so they get less money thus spend less in the economy. can people get serious. the banks are very strong in australia, we do not need to guarantee anything for deposits they are fine in all strong banks.
if they are actually serious about climate change, why not just bring in good policy such as making companies give 5 year warranty for all products - they might actually invest in quality products that last and not make them so cheap its not worth repairing and thus just buying a new one using further resources.
Interest rates are low so that we don't spiral into a recession… consumer confidence is already low as it is now, that's why the interest rates are so low. so that we spend more money.
If you are a baby boomer and have no investments besides your regular savings account, then that is your own fault, not the government's.
Yes the banks are strong here at the moment, but collapses have happened recently. Just look at Cyprus, the UK and in the US bank collapses are quite common (Lehman brothers etc). So yes the guarantee is a good thing otherwise no one would put their money into the bank and there would be no businesses (because the interest rate would increase a lot) investing in the future… which would increase unemployment even further.
I am not a labor supporter. I am a liberal supporter. However, I am just explaining to you some of the good things Labor has done in the past, and why they do. I for one will not be voting for Labor because they have generally have no clue what they are doing. They aren't solving the problem with people smugglers, merely offloading the problem to PNG. Spending is out of control. Unemployment is inching higher. We have not seen the worst part of the GFC here in Australia. I expect a recession here very soon.
Did you miss the GFC Mr Porsche? Apparently so. The Future Fund is also alive and well despite your rant, and can you explain how low inflation and interest rates are bad for anyone in the economy? If one was way ahead of the other you might have a small point. "The poor" who you are apparently so concerned about were compensated for the carbon tax and have received improved family payments under Rudd and Gillard. Rudd also made sure that pensioners got their first decent rise in more than a decade, but these are facts you won't read about in your favourite Murdoch rag. Get some perspective.
Very well said. The Murdoch media is why so many people will vote Liberal aka the Big Business party against Labor which at least cares about healthcare and education.
Gotta love all the labour supporter here. They will be the one saying the government now is smart enough to prevent any economic meltdown but the first to put their hands up to pay up when the levy etc are put on the table.
This government has shown that when you spend like crazy and bury your self in debt year after year in the end it will need to raise tax or levy to pay it up.
Poor labour simpleton will just say yes to everything. From flood levy disability levy cigarete levy alcopop levy now bank levy we will be come levy kevy community
WHen the government is economically good we dont need all these levy just to help up our community destroyed in flood nor we need another levy to help the disable. All this government did is vote buyer with debt and realise it is not sustainable and let bring up the tax (levy)
Whilst I agree with what you have said, you have to face the facts here. Any government in the future, whether it is Labor or Liberal or whoever, will face huge problems balancing their budgets. The fact is that we have an aging population with a smaller labour force. It is going to get even tougher for each government from here on to balance their budget because we will have a smaller work force funding an exponentially increasing aging population.
In my opinion, it will take smart fiscal policy from Joe Hockey to get this mess sorted out. It's just something that we will have to accept. IMO the golden days of budget surpluses are long gone, at least for the near future.
Any government in the future, whether it is Labor or Liberal or whoever, will face huge problems balancing their budgets.
That would be true if they stuck to the rules. But the "rules" are elastic for government. i.e. They destroy manufacturing, while simultaneously allowing imports from free trade agreements to suffocate Australian producers. Then, as jobs disappear, they just create public servant positions out of thin air - and print more money to pay those wages - to cover up their mess.
I highly doubt that they print more money. That would be completely stupid. It is the RBA's job to keep inflation between 2 and 3%, so printing more money e.g. Zimbabwe, would cause hyperinflation because each dollar becomes devalued.
Banks will just reduce interest rate by 0.05% on saving accounts.
I have less than 200k in offset account. Do I get taxed as well?
I posted a reply in The Australian about this recently.
There are many issues with this that I don't know where to start.
Firstly, when you introduce a tax, you are bound to increase it somehow ie: slippery slope. This is already a good enough reason to oppose if you feel Australia is generally a high tax country or you've already paid too much tax.
Secondly, this is effectively a tax on wealth meaning they are taxing something that has already been taxed (tax on post-tax accumulated income). If you believe in socialist/communist principle, this is closer to it. If you feel this is wrong, then this is another reason to oppose it.
Thirdly, a well-governed country doesn't need Deposit Guarantee levy. It has been stated many times but APRA imposes a very strict capital reserve requirement that keeps the banks in healthy state. In other words, it's an insurance you don't need to have as it has almost zero chance of ever occurring. How many of you have income protection insurance?
Fourthly, since this is a tax on wealth, if you are okay with it, you can bet Government will then entrench this to other type of tax on wealth and given Rudd's history, he will implement it overnight. I give you the Alcopop, higher tobacco tax, and now FBT as an example. Negative gearing will be targeted next IF you are okaying him in principle to tax people unfairly. I do regard tax on wealth is unfair for reason number 2 above.
And I have 10 more arguments if I want to continue on this.
Your argument is like spring ice. Firstly your comment that we've all paid too much tax is simplistic nonsense. It might be true in the sense that too many don't pay their fair share - and we all know that these people aren't paye taxpayers. They are businessmen/women, tradies, people running trusts, companies hiding behind shells or using legal loopholes. The financial regulators recommended the bank levy, the alcopop tax was introduced to help curb binge drinking (ask doctors and hospital workers if they support it), and higher tobacco taxes still don't cover anywhere near the cost of smoking to this nation.
My counter argument is this. Unless you are in the lower tax bracket where you probably pay at most 17c in every dollar (after all tax offsets/deductions/etc) on tax, most people in this country are at least on 32c in every dollar spent on tax unless you have big work related expenses etc. Add GST 10% and plus council rates (if you own home), I would argue suddenly there isn't much you take home especially when you have mouths to feed.
You compare to US and Singapore (or even Indo) if you wish as they are our major trading partner, you will see we're quite high.
Usually if you can say that we haven't already paid much tax, chances are YOU probably haven't (ie: in that lower tax bracket).
Secondly, with above in light, it is not illegal to try to minimize your tax as long as it's legal. You're sounding like those who believe everybody in Australia should be taxed at 100% because any attempt to organize your tax is considered "legal loopholes". Corporate tax of 30% is high you know…
Thirdly, does that Alcopop Tax help? Just because doctors/hospital support it, doesn't mean it actually help curbing binge drinking. By your logic, if we are to always support whatever doctors said, then Govt should close Chinese Take Aways (cholesterol, msg, etc), McDonalds, ban lollies (teeth hazard), or even tax games/movies because they could incite violence (R18+). By your logic, we should live like in Disneyland.
And finally, do you know how much cost of smoking in Australia? Try $318m according to latest Australian Treasury analysis. Tobacco Tax is to raise how much? Rudd says $7b in Excise/Custom. By that measure, smokers are already pay more than their way.
Actually the cost of smoking is in excess of 31B. Stop reading news ltd
I didn't. I used Treasury analysis. I will post link when I go home.
You're talking nonsense. I don't compare Australia to most other economies because we have many, many differences. The US and Singapore have very large populations for their areas and relatively low wages and costs. Their larger populations provide a solid tax base during stable economic periods (the usual situation) and makes them far less reliant on primary product trade for example.
If we want roads, hospitals, schools, safety nets for farmers and the less-well-off etc then we need a solid tax base. Of course if you're single, healthy and in well-paid secure employment you might think these things are unnecessary or that governments should just conjure up the funds required from thin air. Do yourself a favour and learn something about your country's economic base and the difficulties it has because of its size, low and sparse yet concentrated population, and its distance from markets.
Governments use many different approaches to change behaviour (education and advertising bans for example) but the one which invariably effects the quickest and most permanent changes are price levers. That's precisely why the cigarette, carbon and alcopop taxes were good for the nation and why eventually a "fat" tax on certain consumables might also be necessary.
And finally, you need to do a lot more research on the total costs of smoking. There have been many studies done which embrace the whole picture. In Victoria alone more than a decade ago the cost to the state of productivity losses alone was put at $5.05B. Costs are not just the obvious - they include the amount of funds unavailable for use for other things. For example the cost of hospitalisation is twofold because smokers not only require care but others who also require care are forced to wait. This means loss of earning capacity and loss to employers.
The banks are supposed to pay for it.