Friday, April 21, 2006

Politicians love power

John Howard was on talkback radio this morning, as 3AW host Neil Mitchell interviewed him over fuel prices and the GST excise on petrol. The federal government charges some enormous amount of tax on petrol, something like 39.2 cents per litre. On top of this, they charge 10% GST, and this component gets given to the state governments so they can go blow it on some pet projects.

The cost of petrol has risen 10% in the last month. Neil Mitchell, who is no genius, figured out that the GST revenue collected must have also risen by 10%, therefore the states are getting more money and us poor motorists are doing it tough with these high petrol prices.
So of course Neil suggested that the Federal and State governments agree to either cut or remove the GST excise to give relief to us motorists.

So far so good.

The PM defended the status quo by saying something along the lines of "Well, the states might be making more money from fuel taxes, but that is more than offset by the loss of revenue from decreased spending in other sectors". He elaborated how consumers have to spend more of their income on petrol and therefore spend less on other items which are also taxed with GST - i.e restaurants, clothes, holidays, movies etc. The PM explained that its not like the government is making more money just because fuel prices rise.

And how does Neil Mitchell handle this excuse ? Being a total incompetent, he doesn't think it through and just accepts it. Meanwhile, I'm sitting eating breakfast and after 20 seconds, I think to myself.

Hang on a sec. The PM suggests the whole situation is revenue-neutral. So why not just scrap the fuel tax ? By his reasoning, people will have more money to spend on other goods and the government will get more tax revenue from those items !

The answer is simple. Government loves money and power. Once they have it, they will use any excuse not to give it up. Global warming, terrorism, the environment, education needs, the national interest, public arts and sports, museums, defence, police, droughts, cyclones and ON and ON and ON.

Heres a pop quiz for every taxpayer out there.

  • Do you think politicians know how to spend your money better than you do ?
  • Do you trust politicians to only take enough tax to spend on things that are essential and benefit you, in the most efficient way possible ?
  • Do you trust politicians to not collect a single dollar in tax than is absolutely necessary so that they can finance the essential public services ?
  • Do you think politicians have a basic understanding of economics ?
For me, the 4 questions above give me the same answer 4 times over - No.