In his budget response, Brendan "I'm a doctor" Nelson proposed cuts to petrol taxes.

Petrol taxes help raise funds for road construction and maintenance. As it is, they barely cover this cost. Reducing this tax would amount to a road subsidy. This effective subsidy is a type of 'negative externality'. Taxpayers who limit their use of the road will be paying to support those who use it more than is economically rational.

Petrol consumption is relatively insensitive to price. This makes petrol taxes a good way to raise revenue while minimising the distorting effect that taxes have on the economy.

Greenhouse emissions are another negative externality associated with petrol. The price of petrol and electricity should be going up to internalise this externality. They will be going up once our kyoto obligations come into force. It makes no sense to lower them in the meantime.

Petrol prices are politically sensitive, probably because people are constantly confronted with the price of petrol on the side of the road. People's awareness of and concern for the price greatly exceeds it's relative impact on our lives. For this reason, lowering petrol prices may be a good short term political move, but it is bad for the economy and bad for the country.

While not as politically popular, blocking the tax on luxury cars would make far more economic sense.

Neferti wrote on May 17^th, 2008 at 3:18pm:


Quite.  I particularly liked the reference Brendan made about Nervous Nelly Swan "he no longer has a straight-A student in the form of Peter Costello to copy. Australians have seen the last tax cut they will see for some time"

He will be fresh out of ideas now.  Some of the measures were lifted straight out of the coalition's election pledges.  Then they added a few tax increases in to show it was a Liebor budget after all.

I think the Opposition should concentrate on tearing Rudd and Co to shreads, rather than give any clues on what they would do.    The Opposition is there to oppose, not direct.  

Neferti wrote on May 17^th, 2008 at 4:11pm:


The only thing they can do is drop Nuclear Power and get serious about the real alternatives.

They have already breathed a few lines about a "solar continent" so their scope is very narrow and they have to come through it...

They can't afford to go playing pansy games with the candyhol issue for too long as they already have a branding issue.

They have to do backflip after backflip and they have to do it and have to start doing it sometime...maybe not soon but sometime before next election and it's only three years away last I heard!

 

BatteriesNotIncluded wrote on May 17^th, 2008 at 4:01pm:


Not quite.  The Australian people decided they were sick of being employed and having low interest rates so they opted for a future of being out of work and having interest rates as high as when Cheating was rooting them soundly while telling them it was in their best interests.

But once they realise that it's hard to get ahead when you don't have a job, your house has been repossessed and Centrelink has closed down they will decide to give the cardboard crowd the heave ho.

Besides which we need nuclear energy.

BatteriesNotIncluded wrote on May 17^th, 2008 at 4:26pm:


How else can I have all my lights on, the tele playing 24/7 and the home theatre keeping the neighbours entertained without a lot of energy?

At the moment there's only one non-polluting way to generate base load when we don't have whacking great rivers crashing through our cities.  Ask the French how they have got their CO2 output down.

BatteriesNotIncluded wrote on May 17^th, 2008 at 4:20pm:


Why are you so interested in what the Opposition says?  Do you think that Rudd will listen and use their ideas?  It's happened already in other areas.  

Brendan Nelson stumbles on $750m blowout

http://www.theaustralian.news.com.au/story/0,25197,23711629-5013871,00.html

BRENDAN Nelson's bid to revive his leadership with a strong response to the Rudd Government's first budget crumbled yesterday as he admitted to a $750million blowout in his plan to cut fuel excise.

As Labor seized on the blowout as evidence of Coalition incompetence, Opposition ageing spokeswoman Margaret May incorrectly declared an increase in pensions was Coalition policy, forcing Opposition Treasury spokesman Malcolm Turnbull to publicly correct her.

The gaffes ended a bad week during which the Opposition Leader and Mr Turnbull struggled to provide a consistent economic message over the need for spending cuts in Tuesday's budget.

On Thursday night, Dr Nelson attempted to reverse his fortunes, delivering a forceful formal budget reply in which he vowed a Coalition government would reduce fuel excise by 5c a litre to 33.14c, improve standards of teacher education and ease capital gains tax on small business.

---

some interesting letters to the editor:

To cut consumption taxes at this time is short-sighted

http://blogs.theaustralian.news.com.au/letters/index.php/theaustralian/comments/to_cut_consumption_taxes_at_this_time_is_short_sighted



MOST TALKED ABOUT
BUDGET BRAWL

THE current sparring between the federal Government and Opposition over fuel tax is disingenuous ("Nelson fuels budget brawl’’, 16/5).

To deal with the inflation problem, spending must fall. The Rudd Government has done its bit and those with home loans are doing theirs. Consumption taxes are part of the general solution to the problem of excessive demand in the economy. To reduce consumption taxes at this time is expedient and short-sighted.
Langford White
Rose Park, SA

BRENDAN Nelson made a valiant effort in his reply-to-the-budget speech. How wise the Coalition has become after just six months in opposition. It has an answer for everything, even for things it could not manage in nearly 12 years of government. Imagine how much wiser it will become in a decade or so.
Robert Keane
Taigum, Qld

IT would seem that Brendan Nelson has finally found some back-bone and emotion in replying to Wayne Swan’s budget. If his heartfelt speech is anything to go by, just maybe Nelson is actually capable of leading the Opposition.
Sven Knudsen
Acacia Gardens, NSW

BRENDAN Nelson’s plan to cut petrol excise is economically and environmentally senseless. The reason why the price of oil is so high is because people are burning too much and there is not enough supply to meet demand. Total world oil supplies are continually diminishing as it is a non-renewable resource. As such, cutting petrol excise is illogical because it will encourage people to use more, when the real solution is to use less. The way to do that is improve and encourage public transport and to use rail and shipping instead of road for transporting freight. Neither of the major parties seem to have a policy for that.
Anna Payne
Boronia, Vic

IT’S quite intoxicating to see Brendan Nelson on white charger riding to the rescue of the liquor industry. Once an opponent of alco-pops, he now sees them as the lesser of evils in the battle against binge drinking and therefore taxable at a lower rate. If other alcoholic drinks are even more dangerous, as he asserts, surely the correct strategy would be to bump up the tax on them too.
Phil Robins
Toorak Garens, SA

I AGREE with Brendan Nelson. The Australian people should not be patronised by incremental payments of the baby bonus.

I’m sure he’ll extend this principle to business activity statements and pay-as-you-earn income tax when the Liberals are next in government and abolish them.
Jennie Connell
Milton, Qld

BRENDAN Nelson is in opposition, not government, so who cares if he is promising to end the drought, reduce petrol prices and proclaim Souths as NRL premiers? I don’t. The Coalition lost, Labor won. End of story.
Graeme Rankin
Holder, ACT

WILL someone please tell Brendan Nelson that Labor’s plan to increase the income threshhold at which the Medicare surcharge is payable is a tax decrease, not an increase?
Bob Clarke
Adelaide, SA

A COUPLE of years ago, my private health insurer wrote to me to advise that, due to an influx of new members, premiums would have to rise, and they did. Now I’m being told by all and sundry that there will be a decline in private health numbers because of the raising of the income threshold for the Medicare surcharge, and this decline will lead to increased private health premiums. Can somebody please explain?
Peter Jones

THE fact that so many people are expected to ditch private health cover as a direct consequence of the new Medicare levy surcharge thresholds reveals just how grossly distorting and unfair the system actually was.

Every July 1, for a decade, John Howard drip-fed new policyholders to the private health funds by stubbornly refusing to address bracket creep. Yet insurers now threaten to raise premiums because young and healthy people - who never wanted their policies in the first place - will walk away.

Does anyone recall the funds reducing premiums when the same young and healthy people signed-up for private health, thereby diluting the proportion of older, higher-risk members? No, quite the opposite, we were forced to wear the higher premiums, well above CPI, year after year, and had no choice but to pay up or pay the surcharge.

freediver wrote on May 18^th, 2008 at 11:02am:


You are going to have to learn to become a critical thinker if you are interested in politics.

The $750m is the GST component and has no effect whatsoever on the federal government budget bottom line.  None.  You (and the paper you quoted) are wrong.  As usual.

Quote:


Brilliant.

Quote:


Post the article by Gerard Henderson saying it sucks and Nelson should abandon it mate. 

I follow no one, I read, analyse and decide by myself. 

Why is it a bad idea by the way?  You didn't say.

freediver wrote on May 18^th, 2008 at 2:00pm:


Instead of flaming you could give an opinion?  Can you get yours from crikey?

Neferti wrote on May 17^th, 2008 at 4:55pm:


Like Energy?!?

You are so sad to be in opposition now, aren't you, but all you have to do is drop Nuclear Power and get on the Solar Thermal solution...

It is so easy but it would seem the Libs are employed to gain the Nuclear Genies foothold in Australia.

They have a branding problem because of it and may become as DEAD as the DODO very soon!

Australians dislike the thought of the Nuclear Genie being greeted down under...

freediver wrote on May 18^th, 2008 at 2:13pm:


May I suggest you get one from crikey again next time if this is yours?  It is ill thought out, highly contradictory but most of all plain wrong.

Have you another?

deepthought wrote on May 18^th, 2008 at 1:57pm:


I cant post an article I heard Henderson say it this morning on insiders check the ABC website you may be able to watch it. Henderson went on to say that the Libs should also abandon Nelson and that the rodent would be rolling in his rathouse at the thought of cutting the excise.

Why is it a bad idea? come on- how much does petrol vary in price on a daily basis? in sydney it could vary fifteen cents a litre in a day, now how many days do you think it would take to suck that five cents up in the mix? I recon one if your lucky. It is a total waste of time, a dumb idea and would achieve sweet fa.

Quote:


Name them

deepthought wrote on May 18^th, 2008 at 3:35pm:


Solar, Hydro, Wind, solar thermal to name a few. All of these things are feasible and better options. The doomsdayers who say they are not have little if any idea about these options I live on solar power I know it works and it cost me half as much to connect than the grid would have.

deepthought wrote on May 18^th, 2008 at 3:41pm:


no, I dont use shopper dockets Its my experience that the stores who use shopper dockets with a four cent discount usually sell their fuel for more to begin with I support my locally owned servo who are the cheapest in town and offer driveway service tabboot.

deepthought wrote on May 18^th, 2008 at 3:41pm:


That's why you voted for serfchoices, is it?!?

 

Quote:


You must live in the bush.  Petrol pricing is highly competitive where I live and no one offers driveway service.  The 4 cents a litre is a substantial saving over every other servo.

BatteriesNotIncluded wrote on May 18^th, 2008 at 3:53pm:


I voted for and continue to support jobs, freedom and a healthy economy.  I vote Liberal.

deepthought wrote on May 18^th, 2008 at 6:21pm:


That doesn't make any sense deepthought. There is no contradiction at all. Internalising an externality and 'offsetting the effect of GHGs' are not the same thing. If you don't understand what I'm saying, feel free to ask, but there's no point pretending you know what these terms mean to someone who has actually studied economics.

I'm not sure where to begin. It's all fairly basic economics, but I'm not going to start drawing supply and demand curves for you. Perhaps if you pointed out which two of the three terms you think are contradictory, or maybe even explained the alleged contradiction, I would be able to explain it to you. If you can't even explain why you think someone else is wrong then you can't expect them to go into further detail in the hope of guessing what you are talking about. Remember, your 'offsetting the effect' explanation you gave above is not what internalising an externality is about.

---

Liberal leaders at odds on petrol excise

http://news.smh.com.au/national/liberal-leaders-at-odds-on-petrol-excise-20080518-2fjj.html

Opposition Leader Brendan Nelson appears to be at odds with his treasury spokesman as to whether the party needs to cost its proposal to cut the fuel excise by five cents a litre.

On Sunday Dr Nelson said the proposal would be costed well before the next federal election in 2010.

But Opposition Treasury spokesman Malcolm Turnbull said the proposal was not yet costed because the party was in opposition.

"There is no suggestion of a saving there ... and it is simply because ... we are in opposition, if we were in government we would find savings," Mr Turnbull told the Nine Network.

It is rational to internalise an externality, but not necessary. You can get away with some very silly things in running a country, but it is hardly a sign of good governance. Then again, you would never catch a politician describing economics as arcane. You may not understand it, but plenty of people do.

This conclusion is wrong:

then the price of petrol will have no effect on consumption

You appear to be confusing relatively insensitive with totally insensitive. That isn't even an economic term, it's plain english.

If you understand it perfectly, why do you describe it as 'arcane'?

Relatively insensitive can mean anything at all, however I took it to mean that within the amount we are talking about (5 cents) it would have no effect whatsoever.

I've never seen it used to mean that. It would be very unusual for a price increase to have no effect. Even if it did have no effect at all, that would not be a reason to get rid of the tax, it would be a good reason to increase the proportion of revenue gathered from petrol taxes.

Every commentator I have seen, on TV and in print, has criticised his idea, for largely the same reasons.

Deepthought, your devotion to the leader of the coalition, regardless of who fills the position and what they say, is very impressive, but sometimes it is in your favourite party's interest to criticise the leader, like lancing a festering boil.

When even the Australian start attacking the coalition, you know they have serious issue. They are openly describing this as populaist and fiscally irresponsible. Even motoring groups disagree with the petrol tax cuts.

Hillary Clinton made similar suggestions in the final desperate throws of her campaign. It pretty much sealed her fate as a loser willing to try anything to stay in the game. While that may be understandable given her situation, the Liberals have three years to rebuild their credibilty and this sort of cheap populism will hurt them in the long run by scaring off their traditional support base. Time may be running out for Dr Nelson, but I can't see why the rest of his party is so eager to follow him over the cliff.



From the top of the front page:

Libs divided on petrol tax

http://www.theaustralian.news.com.au/story/0,25197,23720171-5014046,00.html

Just as the Rudd Government was accusing Dr Nelson and the Coalition's Treasury spokesman of cheap populism and irresponsible economics, an email from Mr Turnbull to Dr Nelson's office was disclosed.

It shows deep policy divisions between the two.

Dr Nelson's promises on Thursday to block the $3 billion tax increase on pre-mixed drinks and to cut fuel excise if elected was well received on talkback radio but attacked by motoring groups and economists.

Mr Turnbull, who missed the Liberal leadership last year by three votes, told Dr Nelson's office in writing only hours before the Opposition Leader delivered his budget-in-reply speech that he thought the 5c-a-litre excise cut was bad policy.

But Mr Swan yesterday accused Mr Turnbull of lacking economic credibility. "In a final blow to the Liberals' economic credibility, Mr Turnbull has defended his $22 billion raid on the budget surplus, despite claiming all week that the budget does not make enough savings to tackle inflation," Mr Swan said.

The Coalition is now divided between those who believe Dr Nelson's promise to cut petrol excise is a political necessity to put the Rudd Government under pressure and those who think it hurts the economic credibility of the Coalition and the Howard-Costello legacy. The Liberals have been torn by the choice between economic responsibility and the political popularity of Dr Nelson's proposal, which has had a positive public response.

One senior Liberal, who thinks the excise cut is bad economic policy, conceded last night that perhaps "it's time for some people to stop behaving like cabinet ministers and starting chasing some cheap populism".

Mr Swan said yesterday that Mr Turnbull "has also dealt his economic credibility another major blow and opened up another major split with Dr Nelson by declaring that he will not identify savings while in Opposition to offset the Liberals growing spending proposals".

"The Rudd Government has found substantial savings and built a strong surplus of 1.8 per cent of GDP to allow for vital future investments in Australia's productive capacity and help tackle the inflation challenge we face now," the Treasurer said.

"If Mr Turnbull had any understanding of the inflation challenge we face now, he would nominate savings to offset his spending and help to tackle that inflation challenge now," he said.

freediver wrote on May 19^th, 2008 at 10:28am:


Post a few of those hey and let's analyse their comments.

Well, DT.....who is right?

The Doctor or Turnbull?

I theenk you reckon Turbull is!!

So, ipso facto, what say ye of the leadership?

Aussie wrote on May 19^th, 2008 at 9:39pm:


I reckon tax cuts are great.  The dude who advocated it is right in my view.

That's no excuse to ignore the economics. There is no moral difference between a petrol tax cut or any other tax cuts, except perhaps some of the externalities, but that hardly supports your argument.

freediver wrote on May 19^th, 2008 at 9:39pm:


The first one doesn't even comment on the economics of the tax cut - it is about the brawl between the two and the second is a bunch of blog comments.

Post what you claimed.  Unless you made up your claim of course in which case you won't be able to post all those 'Every commentator I have seen, on TV and in print, has criticised his idea, for largely the same reasons".

Lets see the criticisms and their reasons hey?  I want to analyse their comments.

Aussie wrote on May 19^th, 2008 at 9:47pm:


I have no idea.  I don't make those decisions.  I disagree with him though.

freediver wrote on May 19^th, 2008 at 9:55pm:


Really?  How peculiar you should say that.

http://www.ozpolitic.com/articles/environment-society-economy.html

It seems at odds with how you used to think.

freediver wrote on May 19^th, 2008 at 10:06pm:


Nope.  Why not read what I actually said, then also read the budget transcript and see what Brendan said.

You are wrong.  And you are also a hypocrite.  You describe the 'economy comes first' model as the 'Mickey Mouse' model.  Now it has become more important than the societal impact of taxation to you.

Once again you contradict yourself.  Just what do you believe in?  It certainly isn't consistent.

freediver wrote on May 20^th, 2008 at 11:05am:


You do say you prefer an economy before a society.  You said this.

Quote:


It's those damned Russkies who have a society but you choose an economy, you will vote to keep our economy over their society.

And no one said that cheap fuel was a fundamental right or even any kind of right.  What I said was that while the government has monster surpluses they can afford to take less from the people.  And in taking less they can lower the cost of one of the most expensive single items in a weekly budget - fuel for the Tarago.  It's a two for one deal and there are no losers with this piece of brilliance.

Now Kevvy doesn't really want to lower the cost of the fuel as he promised - he just wants to watch it go up.  And to make life just that little bit tougher he will even increase the purchase price of your Tarago.

That's Liebor and your economy at work.

I voted for a society.  I voted Liberal.

freediver wrote on May 20^th, 2008 at 5:33pm:


Before you back pedal right out the door would you state just what effect 5 cents either way will have on fuel consumption in your opinion.

freediver wrote on May 20^th, 2008 at 5:39pm:


So the rise of 5 cents will cause consumption to fall and vise versa?

freediver wrote on May 20^th, 2008 at 5:58pm:


OK, you are finally grasping this.

So if 5 cents increase or decrease in price is enough to have an effect on consumption and you say that fuel is relatively price insensitive what is the factor at which it becomes price sensitive? 

Today in Brisbane petrol is priced at about $1.30 a litre so the 5 cents represents about 4% and you say this is enough to affect usage.  At what point does the sensitivity cut in?  1%?  2%?

freediver wrote on May 20^th, 2008 at 6:15pm:


So then answer the question, don't keep ducking it.  Unless you don't know of course (and I suspect you don't).  In which case own up and admit you have no idea.

If it is 'relatively insensitive' to price at what point does it become sensitive enough to affect consumption?  Please answer or own up - it is tedious watching you waltz about in fear.

freediver wrote on May 20^th, 2008 at 6:25pm:


You are falling apart mate.  No answers to anything at all.  No worries.

Quote:


What a b itchy response from the rodent.  What sort of comment is that from an ex PM when the party who backed him for years is floundering?  Who has he got in mind for the leadership of the Libs?

It just goes to show what a lying hypocrite Howard is.  

freediver wrote on May 21^st, 2008 at 1:54pm:


Yes Howard was responsible for removing the indexing, but was it becouse of the GST? . I thought it was becouse fuel prices were going through the roof and Howard was about six months out from an election and he felt guilty about his part in pushing up world oil prices becouse of his part in the illegal invasion of Iraq.

Has anyone filled the tank recently?  It was $1.73 a litre here yesterday!     

BatteriesNotIncluded wrote on May 23^rd, 2008 at 11:54am:


Nope, not joking.  This is Canberra where everyone thinks the Politicians reside.  Kevvie lives here but he's a Millionaire and gets his petrol free anyhow.  

The fuel watch scheme is the only method to bring fuel prices down that is sound from a broader economic perspective. Service stations have a much greater 'negotiating power' than their customers because it is difficult to shop around. There are two reasons for this - the prices change regularly so you cannot compare a price today with a price you saw at a different servo yesterday. Also, there is a cost involved in checking out a number of stations in a short period of time.

The current proposal gets around both of these problems by keeping the price more stable and by publishing price data. It makes customers more informed. Increasing buyer awareness will bring down prices.

deepthought wrote on May 23^rd, 2008 at 6:19pm:


freediver?

ha ha ha ha ha, I knew you would scarper when asked to verify your belief in the partisanship which drives you, but puts you out of touch with reality. 

Cardboard Kev disagrees with you that a scam to watch fuel makes it go down in price.  He is doing it because he hasn't a clue what else to do (while the coalition as usual does).

He finally agrees it will have 'little effect' on prices (we righties knew that already Cardboard Kev - it was only the leftards who didn't).


Quote:

it will mean that every price rise in future will be slightly smaller than it would otherwise have been.

Not if the excise is fixed.

Didn't Howard recently claim the proposed 5c cut would have no effect?

http://blogs.theaustralian.news.com.au/samanthamaiden/index.php/theaustralian/comments/alcopop_tax_may_yet_be_a_fizzer

The Coalition has also already made a rod for Dr Nelson’s back on his populist pledge to cut petrol taxes by 5 cents a litre. By spending the last decade after the Howard Government abolished indexation on petrol excise in 2001 arguing that further cuts would do little to help consumers, the Liberals face a voting public that is far more economically savvy on this issue.

"Not if the excise is fixed."
Er yeah true it's a cent amount not a percentage isn't it.

"Can you provide the link to the information you supplied?  I have not seen anything about this review you speak of.  Where can we see the details about this?"

Think I read about it in a paper publication but it is mentioned here.
Funny how it never got much of a mention in the "swallowing for Rudd" media eh...
From 16/05/08

Quote:

freediver wrote on May 23^rd, 2008 at 9:40pm:


No.


Alex wrote on May 23^rd, 2008 at 10:30pm:


I'm not surprised the 'swallowing for Rudd' media ignored it then if that's it.

First, the Cardboard Kev mob have said that 5 cents a litre will have no effect as it will soon be swallowed up.  Why would they think 3.8 cents a litre would be better?  

Second, as the tax law stands the GST is levied at the point of sale, that is the final sale point.  It is impossible to add a levy (fuel excise) after that without the collector of the excise being the consumer.  A tax review could do it but this would lead to a staggering amount of loopholes and complications due to the point of sale being moved away from final sale and placed somewhere earlier.

Third the impact on GST revenue collected would affect the states and the federal budget would need to be cut accordingly so as to not disadvantage the states.  The impact on the federal budget would equal the impact the Liebor Party are now deriding.

Fourth many taxes (such as the alcopop taxes and the luxury vehicle tax) have GST added to them so there are many examples of taxes on taxes.  Why is this unique?

The 5 cent cut of the fuel excise is breathtakingly simple and devastatingly effective.  Why try to do the same (or a similar thing) and make it absurdly complex?  Unless of course you are a leftard and can not see the pitfalls before you fall into them.

Alex wrote on May 23^rd, 2008 at 11:08pm:


I understand your reluctance to defend the Liebor policy my friend.  Even in my most insane moments I can't find a single redeeming feature in Liebor's cruel attacks on Australia.

I'd be wary of proposing this 'post GST' bungle as an alternative to the coalition's genuine attempt to assist ordinary Aussies on forums - the naivete of this Liebor initiative is instantly apparent to critical thinkers.

Quote:


Please post a link to that claim of what John Howard was saying.

I have no idea what relationship Iraq has to do with this discussion on excise cuts.  Could you enlighten me please?

Thanks Athiest, for some reason I couldn't google it. It's funny how some politicians will use such absolute terms, like claiming 5c will have no effect, but 10c will make it all worth it. Perhaps that's the reason for Deepthought demanding I tell him how much the price has to change before the 'sensitivity kicks in'.

Not sure if Labor really does plan to lower the tax, but both ideas are dumb. It's just unfortunate that the Liberals won't be able to claim the economic high ground on this one.

They said on the news this morning that Australia has the 4th lowest fuel price in the developed world. I guess all those winging poms would fit in well here.

Quote:


That article says

Quote:


I also checked the Channel 7 news site with no luck.  

I need the one which says what you said.

Quote:


See that is not how I remember John Howard historically discussing it.  I'm curious to know why he would change his position.

Alex wrote on May 24^th, 2008 at 1:50pm:


Sadly you are wrong.

If GST is levied at some earlier time on goods (rather than at the point of sale) then additional levies, taxes or imposts (such as the alcopops tax for example) may be levied on GST rather than the other way around.  Additionally if the GST is paid earlier than the final point of sale then retailers will be paying it and retail markups would be on the inclusive GST and this will elevate prices quite dramatically.

While I recognise that Liebor governments traditionally do not envisage the consequences of many of their actions they do have a quite clever public service who will point out the lunacy of this oversight.

Alex wrote on May 24^th, 2008 at 5:54pm:


I think it's so hard because that would take an amendment to the tax act.  I did say of course that doing such a thing would be possible given a review so I have already flagged that for you but the answer you give, though simplistic, creates a great many issues as far as I can see.

First is the act of reviewing the tax act and creating an exception for petrol.

Second is the series of input credits along the way, just how does this affect suppliers (other than the retailer).

Third, what is the impact if the purchaser of the fuel is GST exempt for some reason?

Fourth, where does the exception stop?

Fifth, if there are cross product complications how does the retailer keep his cash register aware of the implications of GST on some products, GST free on some products, or GST with some kind of threshold processing.

Sixth, what complications arise for the small business owner with another category of GST to contend with.

Seventh, how does such a change affect services where fuel is a constituent product?

And I got sick of typing after that but I think you will find that simplistic measures such as you propose create vast underground ripples which become catastrophic, notwithstanding all the points I raised earlier that you conveniently ignored.

The cut in excise avoids all the complications, is breathtakingly simple and devastatingly effective.

I vote Liberal of course because simple solutions are far cleaner and create far fewer complications down the track.

Alex wrote on May 24^th, 2008 at 8:19pm:



I'm afraid I have to disagree.  To review the tax and make an exception makes an exception.  Unless the GST is levied at the same point for all goods or the threshold always applies the system has become anomalous.

I would bever support a system made complex while a simple solution exists.

But tell me this, as Cardboard Kev says that it will make no difference to lower the price by 5 cents -

Quote:


- why would he be contemplating lowering it by 3.8 cents with a GST review?

Can you answer that?  Is it that a little bit of a cut is OK but a bigger one won't help?