12 June 2010

Promises, promises

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.

Two comments:

(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.

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