Budget Rant

The new government has announced a series of small changes to taxes & charges in the recent Budget.

For the most part, I can’t really grizzle too much. Though they could have gone further in some areas.

So just for the heck of it, here’s a bit of an opinionated budget-rant.

The Laptop Computer Scam

How this has lasted as long as it did is beyond me. The arrangement used to be that you could salary sacrifice to buy a laptop PC using pre-tax income. This gave an effective discount on the sticker price of 30% to 40% depending on income.

Then, you could claim depreciation each year on the cost of the machine – but the depreciation was claimed on the amount paid, even though paid with pre-tax income. Effectively, you were claiming depreciation on the cost, not the amount paid in after-tax dollars. The long term effect was that when written off completely over a period of 5 or so years, the laptop PC would have cost LESS than nothing. In other words, us other taxpayers were paying a subsidy to those who bought the laptop and then claimed depreciation.

The changes mean that laptops need to be substantiated and used for work purposes, it seems the ability to depreciate will be removed, though that’s not completely clear.

Removal of a a double-benefit like this is No Bad Thing.

Means-testing of benefits

The baby bonus (also know as the plasma-TV bonus) will be means-tested and paid in forthnightly installments instead of a lump sum.

The means-test is probably no bad thing, though with all the other zillions of family benefits, assistances, and so on that are available, I don’t really see why we need a specific baby bonus anyhow. It was just pork-barrelling by the previous government.

As for payment in 13 easy instalments… I wonder how long it will be before the big electrical retailers are offering big-ticket items that can be paid in EXACTLY 13 easy instalments?

Similarly, the previous Family Tax Benefit B will be means-tested. Probably no bad thing, after all, why should my taxes be used to subsidise the private school fees and fashionable clothing for the already well-off?

No doubt a stack of public servants will need to be employed to check and police all this stuff. I’ve never understood Family Tax Benefit B, and have never claimed it. I suspect I should amend a few years of past income tax returns, but I just can’t be bothered trying to find what it’s about. Besides, I don’t want the government to know any more about me than they already do, so keeping out of the evil clutches of the social security dept and tax office is a Good Thing.

Means Testing the Photo-Voltaic Rebate

Now (tah-dah) CONTENTIOUS TIME. This one I do have a problem with.

In short, households with an income of over $100K won’t get the rebate if they install a solar photo-voltaic system. The PV rebate is worth a LOT of money – something like $8K, or similar.

The logic here is, again, something along the lines of: Why provide middle-class welfare?

And that’s fine and dandy on the face of it, but it’s a bit more subtle in this case.

The new government are green-house believers, Kyoto-protocol-signers, who want to see Australia cut its emissions of CO2.

If they are serious, they need to look at the cost of energy from many sources. Markets are normally driven by prices, and energy from coal and gas is CHEAP. To move away from these energy sources to something more expensive is not going to happen unless there is a good short-term incentive. (A few rare people will shell out their hard-earned for a long term payback, but this is the exception, not the rule.)

Solar power is not cheap, its very expensive, mainly because of the up-front purchase price of the panels. But Australia is blessed with a lot of sunshine, and the amount of power from the sun amounts to about 1 kW per square metre. The efficiency of conversion means it’s very difficult to extract more than about 25% of that, but we do have a lot of roof area in the nation! If you had to choose a country to roll out a lot of solar power, Australia ranks up in the top few.

Fundamentally, the government message is “we are terribly worried about greenhouse”. They go off hand-wringing, and then offer an incentive only to the working poor to do anything about it. Even after the PV rebate, the cost of installing solar panels is thousands of dollars. Few people with a household income below $100K can afford an up-front hit of $2K to $5K (with the rebate picking up the balance). On the other hand, those who are deemed to be well-off CAN afford to spend some of their own money, and usually have both the social conscience and income to want to do something.

So by putting this means-test in place, the government show themselves to be massive hypocrites. The take-up of solar power will plummet because the well-off who would have paid a few thousand will now be expect to pay about 3 to 5 times as much, and the not-so-well-off won’t be able to afford the smaller amount they would need to pay anyhow. CLEVER MOVE, NOT.

4 Comments

The baby bonus has effectively become paid (at some low wage) maternity leave. The other thing about laptop sal sac (getting rid of depreciation was fine) is you and your boss have to sign a stat dec saying it’s primarily for work purposes, making it pointless.

Comment by James | May 19th, 2008 5:31 pm | Permalink

Even more astonishing, I heard Peter Garrett interviewed on radio this morning.

He claims that the PV rebate has been SO POPULAR that they had to bring money forward from future years to allow the rebate to be paid, so (and try to follow now, it very important) by putting in the means test, the number of solar PV systems will BE INCREASED.

The man was loopy in Midnight Oil, and he’s loopy now. Should go back to making a motza singing bullshit instead of singing political bullshit.

Comment by Wally | May 19th, 2008 8:37 pm | Permalink

Yeah the solar panel thing has put off our plans to do it to our house…. for a while. Last year we installed two underground rainwater tanks and only last week had our drought tolerant lawn put down (thank goodness for the rain) with underground drippers that are permissible in drought conditions (and done via the tanks). We’d love to put the house on solar power but, with a 13 year old car on the road, me on an invisible ‘writers income’ and plans to maybe head OS this year it’ll be a long time yet before we flick the switch.

Comment by MillyMoo | May 20th, 2008 8:55 am | Permalink

Unfortunately, most people who make under $100k per year often just don’t have the extra $$ to spend on install a solar photo-voltaic system. It’s a great idea, but the systems are still too expensive.

Comment by Budgeting Tips | November 12th, 2008 1:43 pm | Permalink

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