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Speaker 1: Welcome to ask fear and greed. Will we take your

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Speaker 1: questions and do our best to answer them. I'm Michael Thompson,

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Speaker 1: and good afternoon, Sean.

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Speaker 2: Aylmer, Good afternoon, Michael.

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Speaker 1: Now, Sean, today's question has come in from Darren via LinkedIn,

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Speaker 1: and it is a good question. It is a good

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Speaker 1: question and that I have no idea how to answer.

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Speaker 1: It's going to be relying very heavily on you today.

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Speaker 1: He says, my question is on tax reform. If a

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Speaker 1: government needs, for example, one hundred billion dollars to run,

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Speaker 1: what difference would it make in how it actually receives

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Speaker 1: its income? What are the benefits to the economy for

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Speaker 1: tax reform?

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Speaker 2: Wow? What a question. How long is a piece of string?

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Speaker 1: Well, let's assume the piece of string is about four

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Speaker 1: minutes long here.

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Speaker 2: So, Michael, let's say you want to defined an extra

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Speaker 2: hundred million dollars. Where would you get it? Would you

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Speaker 2: think that the taxpayers of Australia people get income? Text?

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Speaker 2: Should they pay for it? Do you think that companies

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Speaker 2: should pay for it? Do you think that the GST

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Speaker 2: should pay for it? So that ten percent extra we

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Speaker 2: pay on goods and services that we purchase should they

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Speaker 2: pay for it or you want to get that hundred

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Speaker 2: million dollars, maybe we should stop giving discounts to people

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Speaker 2: with large superannuation balances or people who have investment homes

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Speaker 2: and negative gear their houses. So that's another way to

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Speaker 2: get it. What would you do, Michael, That is tough.

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Speaker 1: I would probably go for I was going to say companies,

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Speaker 1: but really GST. I would probably look at that because

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Speaker 1: it's quite fair. It feels like it's spread across everybody. Then,

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Speaker 1: but then again, that's a very difficult one to do

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Speaker 1: politically because no one wants to be out there campaigning

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Speaker 1: to raise the GST. I don't know. Is there a

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Speaker 1: correct answer here, Sean, No, absolutely not. And so if

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Speaker 1: you're labor, no, no no. So if your labor you

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Speaker 1: tend who think more about taxing corporate. So this is

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Speaker 1: very very much a generalization, so I suppose it's even

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Speaker 1: rough saying it, but broadly company tax those sorts of things.

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Speaker 1: You know, the debate we've had in the last couple

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Speaker 1: of weeks around negative gearing, so negative gearing couple gains

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Speaker 1: tax concessions, that those types of things that Labour's talking about,

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Speaker 1: they broadly help those that have money already, so you

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Speaker 1: know you've got an investment home, you've got to have

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Speaker 1: a fair bit of money. The idea is actually not

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Speaker 1: giving you as much of a discount in terms of

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Speaker 1: capital gains tax might be fair and reasonable to many people,

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Speaker 1: so label would think more that way.

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Speaker 2: If you're a conservative, you're less likely to tax companies.

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Speaker 2: In fact, conservatives broadly think you should have less taxes

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Speaker 2: because if more money in people's hands, more money in

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Speaker 2: companies hands, then that it's a good way to stimulate

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Speaker 2: the economy. So if you want to get more money,

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Speaker 2: actually give it to people who are going to spend it,

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Speaker 2: and that stimulates the economy. So there is no right

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Speaker 2: answer to this question. It's just whatever your preference, whatever

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Speaker 2: the government of the day's preference is to how they

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Speaker 2: spend the money. If you think of the Stage three

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Speaker 2: tax cuts that the Albanezy government changed. Originally they were

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Speaker 2: going to help the middle class and those earning more money.

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Speaker 2: In the end they were changed so that the lower

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Speaker 2: income people actually got a break as well. So that's

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Speaker 2: an example of the government kind of changing how it

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Speaker 2: distributes the money. But in terms of collecting taxation, it's

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Speaker 2: all in the eye of the beholder. Really, it's a

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Speaker 2: labor liberal whatever.

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Speaker 1: What about then, say, look at the state based taxes,

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Speaker 1: because then you have some of those things like that

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Speaker 1: are considered to be really inefficient taxes, like a payroll tax,

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Speaker 1: stand and stamp duty on property.

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Speaker 2: Yeah.

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Speaker 1: For instance, if stamp duty was removed or reduced, then

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Speaker 1: it would potentially encourage a lot more people to sell

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Speaker 1: properties and perhaps to kind of to move through properties faster,

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Speaker 1: and in doing so free up more housing supply. For

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Speaker 1: if they have more bedrooms and they need to kind

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Speaker 1: of upside or downsides, it's easier to do that. It's

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Speaker 1: not seen as as a roadblock to kind of people

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Speaker 1: moving through. So while there is a lot of money

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Speaker 1: coming in through these state based rather inefficient taxes, you

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Speaker 1: would think that there would be other benefits to offset.

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Speaker 2: Yeah, I agree with you, But how do you pay

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Speaker 2: for the police force? Yeah? Indeed don't get the stamp duty.

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Speaker 1: Yeah, And that's the problem then with reform, isn't it

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Speaker 1: that as you can kind of do things to streamline

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Speaker 1: processes elsewhere and to kind of free things up and

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Speaker 1: maybe stimulate a bit of activity, But in doing so,

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Speaker 1: you're going to cost yourself on the revenue side.

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Speaker 2: Yeah, totally. And I mean you mentioned it's political. The

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Speaker 2: capital gains tailor invest I think was two point six million.

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Speaker 2: Two point three million people have an investment property. That's

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Speaker 2: two point three million people, the vast majority who are

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Speaker 2: going to vote against the government who decides to drop

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Speaker 2: negative gearing. So politically, very very difficult to change.

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Speaker 1: Goodness, it is a great question, though, isn't it a

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Speaker 1: great question? You know who would love this question as well?

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Speaker 2: Oh god, no, don't, don't bring it up. Don't bring

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Speaker 2: it up.

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Speaker 1: Our colleague Adam Lang, who is the judge on the

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Speaker 1: weekend edition of Fear and Greed, And all you have

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Speaker 1: to do is whisper the words tax reform, and just

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Speaker 1: his eyes light up and his little notebook comes out,

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Speaker 1: and you are in for up to three hours of ideas.

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Speaker 2: That's on a good day.

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Speaker 1: That is on a good day. So he is going

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Speaker 1: to be fascinated by this, and he will be marveling

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Speaker 1: at the fact that we fit in a discussion on

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Speaker 1: tax reform into about five minutes. Impossible, unheard of. Thank

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Speaker 1: you Darren for the question, and thank you Sean for

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Speaker 1: answering it.

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Speaker 2: Thank you Michael, thank you Darren.

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Speaker 1: And remember, if you have your own question, anything that

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Speaker 1: you would like us to tackle, then please send it

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Speaker 1: on through via LinkedIn as Darren did, or head to

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Speaker 1: Instagram or Facebook, or even just go to Fear and

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Speaker 1: Greed dot com dot au and send you a question

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Speaker 1: through and we will add it to the list. I'm

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Speaker 1: Michael Thompson and this is ask Fear and Greed