CAN TAXPAYERS TRUST ANY LEVY WILL BE SPENT WELL

PIERS AKERMAN | January 24th, 2011 ONLY a masochist or fool enjoys paying taxes.

Lumbered as we are with three tiers of government, Australians already pay more in direct taxes and sneaky charges than most advanced nations. In his book Eat The Rich, US satirist P.J. O'Rourke likened Australia to a sun-drenched reworking of the old Soviet Union, the difference being that Australia seems to function quite well. O'Rourke's satisfaction with the running of Australia was probably fuelled by the fact that he doesn't pay tax here. Given his politics, he probably doesn't pay tax anywhere. Despite being so highly taxed, Australians have on occasion, if not happily, agreed to dig deeper into their own pockets for the greater good. When Jeff Kennett was elected after went broke, his first act was to abandon his vow of no new taxes by introducing a one-off $100 charge called the household debt reduction levy. People paid it through gritted teeth - except their teeth were gritted not over Kennett's cash grab but over the mismanagement by the ALP that necessitated such action. Kennett made capital out of his cash grab as it further reminded voters of the Labor legacy. always claimed to be a low tax kind of guy, but he introduced two substantial levies, which combined generated close to $1 billion. The first was the 0.2 percentage point increase in the Medicare levy to fund the $500 million guns buyback in the wake of the 1996 Port Arthur massacre. The second was the Ansett levy, a $10 tax on all airline tickets to fund the $320 million cost of worker entitlements after the airline went under in 2001. These examples suggest that it's possible for a government to get away with introducing a new tax if it can make a national interest argument. The question is whether the Gillard Government is such a government. has tentatively raised the prospect of introducing a one-off tax to help cover the multi-billion dollar damages bill from the floods crisis. The Government has estimated the bill will top $5 billion, the Reserve Bank has said it could be as high as $15 billion. Despite this, both Ms Gillard and Treasurer Wayne Swan have reassured us that somehow the budget will be returned to surplus in keeping with the existing timetable. The somehow part of the equation could just be a flood levy. Labor will have to get around some big hurdles if it is to introduce such a levy without a voter revolt. Under both Kevin Rudd and Julia Gillard, Labor has done a poor job of selling its economic message. Rather than winning kudos for helping us dodge the recession through a well-timed stimulus strategy, the Government has spent much of its time on the defensive over the more extravagant and, in a number of cases, misdirected spending. There isn't a person in Australia, save possibly for Peter Garrett, who thought the insulation scheme was a good idea. And while many individual school communities have applauded the BER for injecting long-overdue funds, the focus on flawed or unwanted projects did such overall damage that many voters concluded the entire thing was a colossal waste of (our) cash.

Against this backdrop, many voters will be suspicious about giving any extra cash to this government, especially if it comes with the promise that they will again spend it on nation-building projects. That's clearly the tactical decision that Tony Abbott has made. After spending a couple of days playing nice at the start of the floods, Abbott has now shredded any pretence of bipartisanship by demanding that the $45 billion NBN be scrapped. Now he's dusted off his great big new tax sledge, the same term he used to great effect in disparaging the Emissions Trading Scheme, to go after Julia Gillard's mooted flood levy. There's been a couple of absurdly overblown claims from the Opposition about the impact of this (still non- existent) tax. Shadow made the bizarre assertion 12 hours after a levy had been mooted that the mere talk of a new tax had already resulted in a collapse in retail spending. Tony Abbott would not be even slightly troubled by such overstatement, he's something of a master of it himself. And the Opposition believes that this government's standing as economic managers is so low that they can go as hard as they like on this issue now. Abbott has also decided to abandon any lingering qualms he had from the election campaign about his position on broadband. There was a view within the that the conservatives misread the broadband issue as a pet issue for webbed-up trendies, when the reality is that many people in rural areas also believe it's important. But its importance may have shuffled down the pecking order this past month. If you live in Toowoomba, Rockhampton or Kerang, the download speed on your iPad is probably among the least of your worries right now.