National-State Relations

Rudd stated:

"What I'm signalling firmly, strongly today is it's time for the buck-passing to end and it's time for the real work, with sleeves rolled up, to begin," Mr Rudd said yesterday. "These are huge challenges for the nation," Mr Rudd said. "The time for buck passing has come and gone. I think the Australian people are tired, just sick and tired of all the excuses which their politicians have served up for so long as to why progress can't be realised in these critical areas of public policy need."

The only reason buck passing is possible is because the national government has delved so deeply into the states' revenue stream and responsibilities. We have a broken federal system which has been smashed through successive anti-federalist Governments and High Courts.

A government is only supposed to raise enough revenue from taxes to support itself and no more. This is not the case in Australia as the national government does 85% of all taxation in the country. Half of the state budgets are dependent on nationally raised taxation revenue such as the GST and Grants.

The quickest way to fix federalism in Australia is dump the GST and Grant system. States would become responsible for meeting their own budgetary needs. This would force them to revisit their agreement allowing the national government to tax income exclusively, curbing the national government's fiscal power by eroding their monopoly on income taxation.

Federalist systems are built upon the principle of their being unique levels of problems and solutions at differing levels of local government. Australia has too much government, but we have too much government at the national level. It is the national government which needs to be restricted and taken down several pegs.

Revenue Through Fees on the Politically Hard to Defend

Atlanta is thinking of adding a $15 charge to speeding fines in order to cover the cost of increasing petrol prices and their consumption by council vehicles.

The nature of government taxation has been changing over the past decade or so. Rather than direct taxes, a new form of revenue raising has appeared where 'bad people' or politically indefensible people are having excess fees tacked on to them in order for governments to raise revenue.

A good recent, and blatant, example of this process was Virginia tacking on extra fees to speeding fines for out of state drivers, not Virginia drivers. It was quickly deemed unconstitutional under the 14th Amendment, however, it shows that the goal of the policy was to raise revenue from 'bad people' without a political cost; ie tacking the fees on to Virginia voters.

The speeding cameras in Scottsdale, AZ are another case in point. The local council now raises approximately 6 million a year from them. No-one likes them and they cause traffic jams, however, the local council needs them for revenue. Rather than taking a case to the voting public as to why taxes should be raised to cover government expenditures and programs; instead a group of people who are hard to defend - speeders - are targeted. Fortunately speeding is done by a majority of drivers so it is a constant source of revenue. Fortunately for the government most drivers treat it like a road tax.

The state of Arizona is thinking of adding more cameras across the major Routes and as further example of how it is being used for revenue raising without political ramifications they are going to share the revenue with the local councils to get them on board with the project.

This is the same reason why speeding fines are so high in Australia. The Queensland government offers payback mechanisms across many payments for its speeding fines. You know a fine is too high when that is the case. It is currently something like $700 for a 140kmh speeding ticket. Very easy to do on some of the open Australian highways when over-taking.

If governments want more revenue to increase services then they should make a political case for it, not raise revenue through under-hand methods by extracting fees from a politically indefensible action. It is the same process as stripping rights from a politically repugnant faction or a group that is hard to defend politically (ie immigrants when whipping up nativism).

It is bad policy and needs to stop.
ranomatic: The "Abusive Driver Fee" was assessed on people with Virginia licenses and not on drivers from outside the Commonwealth.

One of the problems Virginia has is all fines and forfeitures resulting from an arrest by an officer of the Detartment of State Police go into the Literary Fund. I think one of the reasons this was cast as a "fee" rather than a "fine" was an attempt to get around this restriction without scrapping the entire traffic fine system.
cam: Should read my own articles I link to rather than relying on memory.
Brad DeLong: "As the late Milton Friedman liked to put it: to spend is to tax. If the government buys things, it must get the money to buy them from somewhere. It can get the money from three places. It can tax. It can borrow - but then the borrowing has to be repaid with interest, and the more is borrowed the higher the interest and the worse the value the taxpayers ultimately get for their money when they are taxed to repay the borrowing. Or it can print the money and so inflate the currency - but that too is a tax, and an especially unfair, painful, and destructive one, as lots and lots of people victimized by inflation find their wealth doesn't buy what it used to and what they expected."
adam:
This "current policy plus Bush tax cuts" scenario has the federal government taxing about 20% of GDP over the next seventy-five years. It has the federal government forecast to spend 28% of GDP on average over the next seventy-five years.

!

I have not seen it put so brutally in black and white before.
cam: That is why I think the 2008 election will be another blood-letting. People know that governance has been bad even if they cant put a solid finger on why. Democracy is wise and the mob can discern when things aren't right even if they can't voice it in 30 words or less.

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