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28 November 1980. Thought for the Week: "...the whole theory of taxation as a justifiable expedient rests upon two propositions; first that the poor are poor because the rich are rich, and therefore that the poor would become richer by making the rich poorer; and secondly, that it is a justifiable procedure to have a system of accumulating riches, and to recognise that this system is legitimate, while at the same time confiscating an arbitrary portion of the accumulated riches. The latter proposition is very much the same thing as saying that the object of the game of cricket is to make runs, but if you make more than a small number they will be taken off you."
C.H. Douglas in "Dictatorship by Taxation".
A GENUINE TAXPAYERS' REVOLT UNDER WAY
There is a grave danger that the nationwide controversy concerning the proposed introduction of a Value Added Tax will obscure the fact that nothing less than a substantial reduction in TOTAL TAXATION is going to benefit the individual. In the address from which "The Thought for the Week" comes, C.H. Douglas quotes Sir Josiah Stamp, at that time a Director of the Bank of England, as saying, "While a few years ago no one would have believed it possible that a scale of taxation such as that at present existing could be imposed upon the British public without revolution, I have every hope that with skilful education and propaganda this scale can be very considerably raised." Sir Josiah was, of course, quite right, as witnessed by what has happened over the 40 years since.
We have experienced, for example, a massive increase in taxation at the petrol pump under the guise of conserving oil supplies, and promoting new sources of oil and alternative types of energy. But the bulk of the increased taxation has been used to reduce debt incurred by pawning the nation's assets. It was not without significance that the idea of introducing VAT was not "floated" until AFTER the Federal elections. There has been some classic double-talk from Treasurer John Howard, who protests that he is not committed to VAT; he is "keeping his options open".
Under present financial policies, the Government must desperately search for new ways of taxing the individual. The level of direct taxation has reached the level where "the tax avoidance" industry is booming. As fast as the Government's bureaucrats block one tax avoidance scheme, new ones are devised. There is also what is known as the "underground cash economy" with many transactions and activities taking place with cash and no taxation. VAT, or some similar system of indirect taxation, appeals to the bureaucracy because such a system is in today's economy very difficult to avoid.
As we have consistently pointed out over many years, it is mathematically impossible to "fight" inflation while taxation is maintained at present levels. Most of it must find its way into higher prices. Higher prices are the justification for higher wages. Attempts to prevent wages going up while prices are going up are in fact a claim that the individual should suffer a lower standard of living.
The British Thatcher Government, adopting the type of policies of which Prime Minister Fraser approves, is demonstrating how to drive a nation directly into the arms of the Socialist revolutionaries. Yes, Mrs. Thatcher has reduced inflation fractionally, as did the Fraser Government. But the economic carnage is dreadful to contemplate. Production has fallen as businesses go bankrupt and the long lines of unemployed grow. Under the philosophy of Mrs. Thatcher's fanatical Ayn Rand devotees, the pain being inflicted upon the British people is therapeutic.
During the Great Depression, one of the criminals responsible for inflicting it upon the British people, Bank of England's Montagu Norman, said that poverty was good for people. Prime Minister Fraser claims that life was not meant to be easy. If the over taxed peoples of the world had suffered some great natural disaster, and there were widespread shortages, there would be a case for using financial policy to ensure that the burden was shared. BUT THE ACTUAL AND POTENTIAL PRODUCTIVE CAPACITY OF NATIONS LIKE BRITAIN AND AUSTRALIA IS SO ENORMOUS THAT A FINANCIAL POLICY WHICH DENIES THIS IS A MONSTROUS FRAUD, AND SHOULD BE DENOUNCED AS SUCH.
Anyone who has even an elementary understanding
of finance economic realities, including how the nation's
money supply is created in the form of interest-bearing debt,
knows that it is relatively simple to devise a financial policy
which will substantially reduce taxation, eliminate inflation,
and with it, industrial unrest, and make it possible for Australians
to overcome the social and other problems worrying them at
The Fraser Government now faces a revolt from some of its own Senators if it attempts to increase taxation before July of next year. A number of business organisations have protested. And after July the Fraser Government will be faced with Mrs. Florence Bjelke-Petersen's campaign for a 20 percent flat income tax and no further tax increases. The stage could be getting set for a real Australian tax revolt. If such a revolt gathers momentum it could prove a turning point in Australian history.
In the many comments concerning the passing of Sir John McEwen, former leader of the Federal Country Party, no reference has been made to the monetary reform policies advocated by the then Mr. McEwen when he contested the electorate of Indi in 1934, the year he entered Federal politics. John McEwen said he would move for a Royal Commission on Australian banking. But he never did. And after being elected, he lost all interest in monetary reform.
We rarely find ourselves in agreement with Senator Don Chipp. But we feel it could be a valuable exercise if the Australian Democrats took action against false election advertising. Election advertising has become increasingly and blatantly false. The late C.H. Douglas suggested that before elections the parties should be constitutionally required to present electors with a prospectus, including the total amount of taxation they proposed to raise, and that the successful party should not be able to increase taxation beyond the level they nominated. Not without seeking a fresh mandate from the electors.
Prime Minister Fraser is confronted
not only with Senate problems. He must some time next year
hold two by-elections, one in Boothby, South Australia, and
the other in Curtin, West Australia. The seats will become
vacant following diplomatic "plums" for Mr. John McLeay (Boothby)
and Mr. Vic Garland, (Curtin). If there is a major swing against
the Liberals, which is extremely likely, Mr. Fraser's leadership
will come under increasing pressure. There is nothing like
the threat of loss of power to smarten up political leaders.
QUEENSLAND STATE MINISTER WARNS ON V.A.T.
"The Federal Treasurer should stop basking in the federal election glory. He should start looking at the havoc his income tax policies are causing." Mr. Sam Doumaney, Queensland Minister for Welfare, quoted in The Australian, November 24th.
Mr. Doumaney could become the next leader
of the Liberal Party in Queensland after the imminent State
election on Saturday, November 29th. With the bluntness that
has come to be associated with Queensland policitians, Mr.
Doumaney promised the Prime Minister, Malcolm Fraser, a brawl
on the issue of V.A.T. Mr. Doumaney highlighted one of the
weaknesses of a remote, centralised Federal Government - its
destructive isolation from the effects of its own policies.
This, in turn, endorses the necessity for government to be
as decentralised as possible: closer to the people and the
FROM JONDARYAN V.P.A. (Qld.)
Chairwoman sends us 2 articles on the condition of the Australian economy by H.W. Herbert, one of the sounder Australian economists who writes regularly in The Sunday Mail (Brisbane). His comments (made before the Federal election) on the Australian Democrats are interesting:
"New Senators will not take their seats until July, and in any case the methods of controlling the economy - money supply, interest rates, exchange rates and capital inflow - are administrative (our emphasis), not legislative (our emphasis) acts that the Democrats can influence."
On Capital inflow, he says: " ...capital inflow is a two-edged sword. Does the swinging voter rejoice in Australia's attractiveness for overseas capital, or resent the amount of foreign ownership of our resources?"
On petrol pricing: .."Labor's policy
for a pause in increases, then tying local oil prices to the
C.P.I., is much better than the present policy of adopting
every overseas rise. But I was disappointed that Labor opted
to use some oil tax revenue to cut income taxes rather than
cut other sales taxes which would have lowered inflation."
On the shift of the taxation burden to a more indirect method: "There are points in favour of this: tax is unnoticed and it does not affect work effort.
But there are even stronger points against
it: "When taxes on petrol, tobacco and alcohol reach the present
heights of the Government taking half the price, it only needs
publicity to make the public resent it with every purchase.
To increase these indirect taxes would instantly lift the
rate of inflation and we will certainly be trying to reduce
this economic menace in the early 80s.
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