Wednesday, April 05, 2006

Tax and public transport

It's common knowledge that the national tax and super system doles out hundreds of millions each year to support profligate private motoring, while discouraging public transport use. FBT benefits, car leases, salary sacrifice, mileage allowances and other nonsense are just some of the hidden subsidies that provide perverse incentives to drive more.

So what to do about it?

Labor's Tanya Plibersek wants to keep the car subsidies intact (does she have union mates in the car industry with vested interests?), but allow people to buy public transport yearly tickets.

Crikey's Christian Kerr takes a different view, preferring not to subsidise either and return the savings to people in the form of tax cuts.

Though I have misgivings about the quality and benefit of tax cuts that might be offered, in principle I'm with Kerr. Plibersek wants to keep a major rort and offer a small countervailing benefit. Whereas Kerr wants to remove a major rort and not offer a small benefit. That's a much better approach, especially if some of the savings can be invested in public transport services.

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