Opinion & Commentary
Beattie spins out of reality
This week's prize for government "spin" should go to the Beattie Government for its hike in stamp duty on motor vehicle registrations and transfers.
The spin is so clever, in fact, that it deserves a place in the finals for the annual award.
The Government claims that the 60 per cent increase in duty is good environment policy as well as being needed to fund mental health services.
Peter Beattie and Anna Bligh, pictured, want Queenslanders to think that in swallowing the bitter pill of a 60 per cent increase in this tax they are making a sacrifice, not for one but for two worthy causes -- reducing carbon emissions and treating mental illness. The reality is something else.
Take the environment aspect first. Replacing the existing flat 2 per cent duty by a sliding scale that favours hybrid, LPG and smaller engine petrol vehicles may influence a few people's choice of car, but stamp duty is too small in the overall purchase, financing and lifetime running costs of a car to make a big difference to the composition of the fleet.
Like other stamp duties, the one on vehicles is a tax on transactions and the higher it is the fewer transactions there will be. It is likely to have its main effect on the frequency with which people change cars rather than on the type of car they buy.
In any case, it is the usage of cars -- how much, when and where they are driven -- that determines their environmental impacts, and stamp duty has no bearing on the cost of usage once you have bought the car.
It makes no sense for the Queensland Government to be tinkering with stamp duty for the sake of the environment when they continue to subsidise every litre of petrol consumed in the state by 8.3. It is the only state to provide such a blanket subsidy.
If the Government were serious about cars and the environment, it would scrap the petrol subsidy and introduce congestion charges and electronic road user charges. Whether one would advocate such measures is another matter.
The point is that they would be much more effective in reducing carbon emissions than a restructuring of stamp duty. It is breathtakingly inconsistent to increase the stamp duty by 60 per cent ostensibly for the sake of the environment while maintaining the petrol subsidy. One policy works against the other.
The real motive for the stamp duty hike is more revenue. The duty scale could have been rejigged to the same effect but without raising additional revenue -- for example, by removing the duty altogether for hybrids and LPG, reducing it for four-cylinder petrol cars and increasing it for others. Attaching an "environment" label to this $200 million increase in tax revenue is just opportunism in the midst of community concern about global climate change, which is especially acute in water-deprived southeast Queensland.
Not content to stop the spin there, the Government goes on to draw a link between the increase in vehicle stamp duty and spending on mental health. This is totally spurious.
In truth, the tax increase and funding of mental health services are independent. The higher tax dollars paid by car buyers will not arrive at the Treasury stamped "for mental health". They will add to general revenue, which is fungible -- in other words, you can't identify what each dollar of revenue is paying for.
Over the years ahead, the revenue from vehicle stamp duty won't determine how much the Government spends on mental health. It would be just as valid to say that the increase in vehicle stamp duty is helping to pay for the phase-out of mortgage stamp duty, or for the increase in police numbers, or for anything else the Government is doing.
If the Government believes that its total service delivery and capital works task requires it to increase any tax in order to keep the state's finances in a sound condition, it should make the case in those terms, not indulge in opportunistic and duplicitous spin.
Mind you, that would be a difficult case to make, when there has already been a near doubling of tax revenue since 2000-01, from $4.3 billion to $8.4 billion. That's an inflation-adjusted increase of 65 per cent, over a period that has seen the state economy expand by 37 per cent.
Looked at another way, state tax revenue per head of population has risen over those six years from $1185 to $2027, which represents an inflation-adjusted increase of 43 per cent.
Total revenue, which includes commonwealth grants among other things, has risen by less but still by 30 per cent in real per capita terms.
These are startling increases by any standards, even the standards of a boom state. They make you wonder why the Government needs car buyers to contribute an extra $200 million a year to its coffers.
Robert Carling, a former state and commonwealth treasury official, is a visiting fellow of The Centre for Independent Studies
