Sunday, May 18, 2008

Budget Slush Funds

Alan Wood is concerned that the budget surplus funds could end up as either slush funds or market distorting industry policy.

As far as I'm concerned budget surpluses mean we are being over taxed. The government is raising so much tax this year that it can't easily spend $21 Billion! If previous years are an indication thats an under estimate too.

There are about 10 million workers in Australia. Giving everyone a $2000 tax cut/tax credit would use up the surplus. However lets assume that its a good idea to keep that money out of our pockets for the moment. That the government should counter inflation by cutting demand.

Even if this is true there still is no reason for the government to keep it. Just don't give the money directly, instead deposit it into individual saving funds, probably linked to a person's super. In a few years people would have enough money saved up that they could use it to replace welfare hand outs such as the dole allowing further tax cuts.

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