What on earth is tax reform?

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Tax reform means to re-form the tax system. Will a re-formed tax systems be a better one? Jonar Nader says that most people seem to think that ‘reform’ refers to improvement, but he warns that a re-shaped systems is not necessarily a better one. To listen to an excerpt from the radio broadcast, please click on the green play button below.

Here is a transcript of the audio file.

Host: This week we have Jonar Nader. Officially Jonar is into technology and he talks to Kevin Norton each weekend on that topic. He is also into issues of leadership and that is one we might explore in the future along with customer service and guns, just to name a couple. But today his hot topic is ‘Tax Reform’ and Jonar Nader thanks for joining us. Let’s have a look at tax reform and it is very topical this week with all sorts of talk about a plebiscites on the issue but I suppose we have to look at what the meaning is of ‘reform’.

Jonar Nader: Yes although it is a bit rude that word ‘plebiscite’. Sounds rather saucy doesn’t it?

Host: It does a bit.

Jonar Nader: Now reform; look I must say that I really want definition on everything. Can someone tell me what reform means? I did a quick survey just before coming in here to talk with you. People seem to think that to reform means to make things better, to refresh, to improve, but you know, in truth, I do not believe that is the case. I think the word ‘reform’ just means what it means, to reshape, to give something a new form, a new structure, a new set of rules. My fear is, who are these people who are going to give us this new set of rules? The old people who gave us the old set of rules?

Host: So it may well be that we do not end up with something better. We just end up with something different.

Jonar Nader: Yes, I want that articulated. What does it mean when we want Tax Reform? I would much rather a statement that is definitive that says we need to raise 5 billion dollars, therefore let us set out to raise it fairly. What does it mean? How much money are we looking for? Who is going to be better off? Who is going to be worse off? Who is going to have to dig deeper in their pockets? I think that the government must articulate its meaning, its objective, and its desires, or else this notion of tax reform is such a slippery subject like any other subject in the public arena.

Host: Because at the moment everyone is going gripe, gripe, gripe about tax, and the government is going well we’ll change it, and that is basically the depth of the argument.

Jonar Nader: Yes, although I think there is something deeper to it than that. I think the government does not have enough money to spend on the things it wants to spend on. Part of the reason it does not have enough money is that it is spending through the roof, and the other reason is that we are told by learned economists that the tax that was generally raised through say sales tax (that is called indirect tax) is slowly diminishing. This is because people are not buying many goods, but more services, and a lot of services do not have taxes attached to them. This is a curious position to be in because the question of GST (the goods and services tax) always comes up. The GST supposedly says that the user pays therefore the user decides, and (before I go into my definition on GST) the predicament we are in today is because the user decided. The public decided to buy less goods and more services, and as a result of their decision, we are now having to penalise everybody again, and say hang on a minute we are not raising enough money!

Host: Changed the ground rules.

Jonar Nader: Yes, so the GST is in the papers this week

Host: Yes with this plebiscite, that rude word, so how do you define a GST?

Jonar Nader: I think that any word should only be acceptable to us if its converse is also true. The GST currently seems to imply that the user will pay and it seems to be a fine and dandy notion. Well, let’s test the theory. Is the converse true. Is a non-user someone therefore who does not pay. But there are social services they’ll say. What about hospitals, kidney machines, you know all the things we must have? Okay, then we will agree that we should all, as a community, share and pay for things that are called essential services. Well, what will happen to things that aren’t essential services? That therefore, still needs to be articulated by the government. Can you please tell us? Don’t go into long economic statements that no-one understands and throw in the word ‘fiscal’. Let’s start counting how many times the word ‘fiscal’ will come up between now and the end of this debate.

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