European Choices are Australia’s Too

I have been in London for the past few days for a series of engagements. It is a wonderful city which has become a magnet for tourists seeking to soak up its rich history and shop in its famous stores.

It is also a city of many layers. One political leader told me that the super high-end brand name retail stores were still doing well, thanks largely to the flow of tourist money. However, he then went on to say that many small businesses were struggling in the tough domestic economy.

Among the people I have met at various functions, there still seems to be optimism about the future but they were worried about the economy and the financial affairs of Europe.

The way to restore confidence, I was told, depended on whether the speaker was a europhile, economic dry or welfare stater.

The pro-Euro advocates see an even closer link with the EU as critical to rebuilding British fortune. They maintain that such an approach would open up markets, provide economies of scale and ‘as the European tide lifts, the English boats too, will rise’.

The counter view was that those things are all available and will continue to exist even if Britain stops obeying the dictates of the European Parliament. These already comprise a significant portion of British domestic law.

The economic dries maintain that government spending needs to be cut and the national debt reduced. Whilst acknowledging this would entail some austerity within the nation, they insist it is the only way to affect lasting, positive change.

The third way proffered was to maintain, or even increase, government spending and impose higher taxes to try and make up the shortfall.

A step in the third direction was released by the Liberal Democrats on Sunday morning when they announced that anyone who owned property valued at more than £1 million would be subject to a tax audit. A million quid seems like a lot of money, and it is, but it’s not that big a number when it comes to London property.

It was part of a plan to ‘target the rich’ and ‘make them pay more’ so that welfare services would not have to be cut.

The response from the media to the announcement was illuminating. Right-leaning dailies reported it as an assault on the middle class, stating that anyone earning over £50,000 was now a target. The left-leaning Guardian suggested it was a triumph to make the top 10 per cent of earners pay their fair share.

It reminded me of the class warfare debate that Labor are stirring up in Australia. Those who have been successful are now regarded as targets by a Labor Government that has no concept of efficiently managing taxpayers’ money and no experience in balancing a budget.

The aspirational middle class continue to be hit with a growing list of tax increases that are specifically targeted. Barriers to employment and harmonious industrial relations have been inflicted upon every business in the country. People are now questioning if running a business is even worth it any more given the layers of bureaucracy faced by the entrepreneurial.

It reminds me of the maxim attributed to Ronald Reagan who said critically of governments’ approach to taxes: “if it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidise it”.

When will we learn that the path to national prosperity isn’t to nobble the successful or subsidise the failed? Rather it is to encourage every individual to strive to achieve the best they possibly can.

Across the world, as national economies struggle under the weight of debt and excessive regulation brought about by the tax and spend approach, Australia should heed the lesson.

We need more risk takers and more entrepreneurs. It is a sign of a healthy and prosperous society. Attacking those who have already achieved a level of financial success and independence only acts as a disincentive for others to seek to do the same.

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