|Australia ought to: Re-introduce Federal tax upon unimproved land values of non-rural properties in excess of $100,000 unimproved land value; Impose a special tax upon vacant office space; Introduce a capital gains tax; Re-introduce mport licensing ; Adjust tax schedules in favour of lower and middle income groups; Seriously examine the pricing arrangements of foreign-owned multinational corporations; Examine the double-taxation agreement; Eliminate sales tax on all essential items, and reduce it on less essential items. --Clyde Cameron, Australian Federal Minister, writing to the Treasurer in 1974|
Member of the Bannerad system
Progress, November-December 1996, pages 3 and 4
27 June 1974Dear Frank,
I promised that I would write to you concerning the fiscal policies that I believe we should be following to deal with the present inflationary situation. You will recall that I sought to open up this question during the talks with the Prime Minister arranged with the Australian Congress of Trade Unions'. (ACTU) representatives in Canberra on 20th June.
I am thoroughly convinced that if we are to make an effective attack upon inflation we will need weapons that we have not so far seen fit to use. These must include the following:
It is useless talking about allowing the States to control land prices. They will never do it and we should accept that as a fact. You might recall that when the Menzies Government abolished the Federal Land Tax the Labor Opposition then stated quite categorically that a Labor Government would re-introduce the tax.
Our aim should be to impose an unimproved land value tax upon vacant land that is greater than the unearned increment that accrues to the land due to the operation of a law of supply and demand or of inflationary pressures. In other words, land speculators should be given the choice of either releasing the land to those who require it for home building or going broke to pay the tax which we would levy upon it while it was held out of use.
You will recall that I raised this matter during the pre-Budget discussions last year and that there was tacit agreement among the majority of Ministers that the re-introduction of a Federal tax upon unimproved land values of non-rural properties in excess of 100 thousand dollars should be adopted. I raised this matter, you will remember, with Sir Frederick Wheeler when he and his team of advisers appeared before a Cabinet meeting some months ago. Sir Frederick's excuse for not having included this proposal in last year's Budget was that Treasury did not have enough time to study the proposition. Actually, Treasury did not need much time because the land tax apparatus is already established by virtue of the fact that all of the States use it for revenue raising purposes. Treasury has now had almost a year to think about the matter and I would hope that lack of time would not again be used as a reason for further delay.
3. We should introduce a capital gains tax on all incomes derived from share transactions, the sale of land and the like, so that we can strip away all advantage that now comes from undistributed profit. In this way we would be able to make more money available to home builders and to other worthwhile projects at reasonable rates of interest. Investors are not going to bother about lending money to home builders and to the expansion of small businesses when they can reap such tax-free fortunes from investment in public companies which build up an enormous cash and capital reserves as an alternative to the distribution of dividends.
4. Import licensing should be re-introduced so as to ensure a reduction in the wholesale and retail costs of imported goods. We ought not to allow importers to benefit from reduced tariffs without being required to pass on that benefit to the consumer. By licensing all imports it would be possible to require an importer to control retail prices, by refusing to supply to wholesalers and/or retailers who charge or permit to be charged prices in excess of specified mark ups.
Introduction to Protection or Free Trade, 1888, by Henry George.
I seem to remember reading about a system of tax indexation which has been adopted in Canada. If I am correct, could a similar proposal be adopted for Australia?
7. I would like to see a re-examination of the double taxation agreements that now operate between Australia and certain other countries. I opposed the first double taxation agreement and I am still opposed to the concept.
8. We ought to seriously consider a surtax upon dividends remission to foreign countries or even to prohibit the remission of dividends payable by Australian subsidiaries to parent companies abroad. The Chifley Government did this and we ought to be doing it in cases where the remission of dividends to overseas companies causes undue strains upon our economy.
The steps that I have outlined above would be a much more equitable and effective way of dealing with inflation than propositions for incomes and prices policy involving voluntary or compulsory wage restraint. The latter propositions have never succeeded in any of the countries in which they have been tried and I know of no reason why we should think they should succeed here.
You will recall that at the beginning of the year, I said that unemployment would rise before the end of 1974 but on that occasion Treasury officials saw fit to ridicule my forecast. I am convinced that I was right. I want the Government to change course before it finishes up in the same sorry mess as its predecessors found themselves in 1972.
I am forwarding a copy of this letter to our Cabinet colleagues because I want them to be in a position to consider what I have proposed when Cabinet holds its pre-Budget discussions in a few weeks time.
Editorial Comment: This letter was aimed at influencing people very loyal to Labor politics and may not read as pure Georgist economics. To introduce our practical philosophies to people who are already loyally committed to any corner of the political spectrum, requires respect for their position, tact and diplomacy
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