Tax reform should be seen as a saving for the taxpayer, not a cost to the government

Agitate! believes in giving credit where credit is due.  Both major parties in Queensland are to be congratulated for showing (some) commitment to payroll tax reform.

Labor and the LNP have promised payroll tax rebates to encourage employers to hire and retain staff.

Under Labor's scheme companies will get 25 per cent off the payroll tax of other employees if they employ an apprentice

The LNP proposal is to introduce payroll tax rebates of up to 10 per cent for businesses with a payroll of between $1million and $5million that retain or hire new staff throughout a financial year.

As far as genuine tax and regulatory reform goes, this is a start and it is hoped that more substantial reforms will be unveiled as the election campaign progresses.

However Agitate! is somewhat nonplussed by reports of what these policies will ‘cost’.  Apparently the LNP and Labor payroll tax policies will ‘cost’ $55 million and $15 million respectively in lost revenue per year.

How exactly does a tax rebate count as lost government revenue?  Taxes are paid by the people; it is their money, not the governments.  Therefore how is this supposed ‘lost’ revenue a ‘cost’ to the government?  Indeed the less money the government collects the better.  It reduces the opportunity for them to waste it on useless expenditures and distort the efficient operation of the free market.

As the greatest economist of the 20^th century Milton Friedman, was fond of reminding us all, the real cost of government is not what they collect in taxes, but what they end up spending.