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Naked truth is better for selling tax

By Geoff Carmody - posted Thursday, 1 July 2010


Of course governments don't advertise this. They prefer the illusion that rich developers pay the levy. The reality is that housing affordability is undermined and community infrastructure costs are financed by a few.

Tobacco taxes are an example where politicians go closer to telling the truth. Here, they do argue increased tobacco excises won't be paid by the tobacco companies but will be shifted to smokers.

This is correct. In this case, however, politicians pretend the tax increase is to cut smoking rather than to raise tax revenue. Chances are tobacco tax increases will cut smoking a little bit but raise tax revenue a lot. Naturally, governments pocket the proceeds if people keep smoking.

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More honesty would make politicians' jobs easier. Honesty acknowledges the inherent common sense of the electorate.

It may even increase respect for what politicians are on about.

It couldn't make things worse.

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First published in The Australian on June 24, 2010.



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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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