Welcome back

Six months after my last post, after defeating the black dog once again - this time a particularly vicious struggle - climbing out of the winter hibernation, becoming a card-carrying member of the Rockingham branch of the ALP (aka 'BoganVillea' WA) , dusting myself off, and climbing back on top of things in my usual pose of futile defiance, I offer an olive branch of springtime greetings to my long list of fellow progressives. Abandoning my usual template I shall forego quotes from the MSM to refute or compliment, and wax lyrical ad liberato on the topics of the day. Read on and you may even hear from those masters of meaningless verbiage, the 'Talking Heads', who I am in the habit of ignoring. And. So. What have we here.

Turn down your cringe meters but don't throw them in the bin yet. Our Friar Tuck Moment has transmogrified into a Silvertail moment

Tax reform will be a big topic in the approaching election and rightly so. It is, and has been since the great depression, a creation myth of the welfare state, the great Waggle Serpent of Western Civilisation if you like, which has defined the dichotomy between progress and regress since that time. The ALP is waging a media blitz to make certain of this. Its focus is on a proposed increase in the GST, and the 'fairness', or lack thereof, of such a proposal, tabled by the Silvertails under the seemingly innocuous smokescreen of rigorousness - 'not excluding anything from the discussion'.

Firstly, allow me to point out the utter hypocrisy of commissioning a highly expensive tax white paper - conveniently composed by a fellow silvertail and therefore adding more smoke to the fire - while at the same time spouting off about the profligacy and wastage of the other side, not to mention the great albatross of our Friar Tuck moment just passed - yes I speak of the mythical debt-deficit-disaster, of which much argument and evidence has been revealed to clearly demonstrate the illusory nature of its efficacy. The conflict has now been defined by the Silvertails, unless it is taken back, as between increasing the GST to fix the d's or not, thus distracting the electorate from the main game. The big discussion needs to be about optimising the present system, then - if and only if further funds are needed - limiting middle class welfare (tax perks in superannuation and negative gearing) then - again if and only if further funds are required - redesigning the progressive income tax (allowing those who won't notice the difference to contribute one or five percent of their overvalued remuneration, as opposed to grinding those to whom such an impost means the difference between food-on-the-table and paying-the-rent further into the dust, to give their fair share back to society) then, in the unlikely event that even more money is needed, examine the GST. If you got lost in that last sentence in reading it, just imagine what I went through in writing it.

The logical common-sense progression outlined above to deal with this problem is in fact ALP policy. Our fearless leader implied as much when I confronted him about it at the North Perth Town Hall last Saturday. But let's delve further into the relationship between this important issue and  the ALP campaign for there is a huge difference between a Friar-Tuck-Moment and a Silvertail moment which is ignored at one's peril.

A quick scan of the twitterverse clearly demonstrates the depth of ignorance or what we might call egocenticity out there, characterised by the 'I make over a hundred grand a year so go ahead and raise the GST - it won't affect me', crowd. Sorry guys but, in the extreme extension of the concept, it will drive up the cost of building barbed-wire enclosed enclaves to live in and protect your wealth and that of hiring body guards and security staff. Furthermore, do you and your ilk truly wish to live in a society - oh, I'm sorry; your neo-liberal-thatcherite ideology prevents you from recognising the existence of such a thing as a society - where you are in constant fear for the security of your wealth, let alone your existence.

But all that, while important, is beside the point - well one of them anyway. The ALP campaign focuses on fairness, and how the GST just isn't fair, as if the electorate is populated by small children spitting the dummy. My first question would then be "what do you mean? why is, or what makes, the GST 'regressive' and therefore unfair?"

The terms progressive and regressive  are used in a littoral rather than political sense here. Income tax is progressive in that the tax brackets are designed to focus the effect of the tax on those who are best able to pay it, so that the brackets 'progress' from lowest to highest. Regressive is simply the opposite meaning, implying a tax which impacts the poor but is barely noticed by the rich, and only noticed a bit by the middling rich.

So, instead of treating the electorate like small children, by enunciating the umbrella descriptor 'unfair', why not treat people like adults and explain them as I have done here. Friar Tuck started this by sloganising the political discourse and look what happened to him. Mr. Silvertail is a different kettle of fish and it will take something intelligent and outside the box to defeat him. There are many compelling reasons not to increase the GST and to group all these under the umbrella descriptor 'unfair' treats voters as to stupid or time poor to understand or perceive the detail. It's not that hard.

A logical progression from the above is that the poor characteristically spend their entire income on living expenses, thereby creating demand, hence jobs - ie stimulating economic activity. This is of course contrary to the myth that the Silvertails would have you believe (that rich people always and only spend their excess income on philanthropic pursuits which then 'trickle down' into benefits for the poor - the opposite being closer to reality). So increasing the GST is deflationary and contractionary by definition and would lead, in the extreme, to recession.

That deals with the term regressive as applied to taxes. Not really too difficult to understand. Now to throw a spanner in the works.

The GST has the effect of increasing the price of the item it is applied to by the rate of the tax applied and is therefore inflationary. We've just shown that its effect is actually the reverse of this.

The reason behind this seeming oxymoron is that, unlike the progressive income tax, it is applied to the means of production in such a way that its effect is passed on from the stage above to the stage below until it reaches the consumer who has no one to pass it on to and so must absorb it. Hence the cost of the GST can be both inflationary and deflationary at the same time.

Interest rates rise with inflation. This is an outright observation and needs no explanation. The inflationary aspect of the GST will therefore lead to higher interest rates than would otherwise be the case. Anyone with a mortgage should be worried. This statement also conveniently dispels two more urban myths: that 'interest rates will always be lower under an LNP government' and 'that LNP governments are better at managing the economy than ALP governments'.

That deals with two things. There are many more but time and energy constraints preclude me from addressing them now. It will have to wait for another post and another day. Catch you then.