As a sweetener to the Western Australian public Prime Minister Kevin Rudd has promised Western Australia $2 billion for infrastructure development to be funded from the proceeds of his proposed resource rent tax on the mining industry. He has made a similar promise to Queensland.
(1) The merit of a tax has nothing to do with all of the wonderful things that a government could spend the money on. The merit of taxes is all about tax principles and tax design, a key aim of the latter being to raise revenue without distorting business decisions.
(2) Things being as they are, a Kevin Rudd promise is not exactly a bankable document.