Starting or killing, the tax debate PM Tony Abbott gave a very good speech to the Business Council on Tuesday night,writes Terry McCrann. Picture: Jeremy Piper Source: DailyTelegraph JUST about the dumbest thing I have heard all year was all those newsreaders breathlessly announcing the shocking headline news that the government's petrol tax increase was going to cost the average family a thumping 40c a week. Heaven help them, where on earth will Australia's families possibly find that sort of serious money? Surely mum - or stay-at-home dad - will have to find a part-time job; all the kids will have to lose their smartphones. All of 40c extra every week; why, in a year, that will add up to the staggering sum of $20. Sorry, $20 and eighty cents - that last 80c will be the straw that sends families to the workhouse. Now granted, the newsreaders and, more pointedly, whoever wrote the copy for their autocue, were only transcribing the government's claim of what it would cost. But how on earth could one person write it down cold, a purported editor tick it through, and a third actually read out those words, without someone saying: hang on, are we serious, are we actually going to mouth these ludicrous words "40c a week"? At the very least those utterly mindless, breathless words should have been qualified by: "the government claims ..." At the very least, the words should have been modified to something along the lines of: the hit might start out as an all-but-irrelevant 40c a week, but the whole exercise is precisely intended to lock in an increase every six months, literally forever. So that even though by the time of the next election, the increase would only be up to a still all-but-irrelevant 80c or so a week, it would be on its way. And perish the thought we ever returned to more serious - high single-digit or, worse, double-digit inflation. Then the increases would start to gallop, into really serious money. And you would really be getting whacked at the petrol pump precisely when you were getting whacked everywhere else. The reaction to the cost of the petrol excise hike is such a depressing pointer to the prospect of getting the real tax reform we need, to make the economy work better and to actually, hopefully, leave more money in people's pockets. The petrol excise device was just premium-quality dumb. Certainly in political terms - if you are going to be in the politics business, you have to be at least half-politically smart. This was 98 per cent proof politically stupid. To get what are ultimately rounding error, irrelevant sums of money for the Budget, Tony Abbott and his finance minister, Mathias Cormann, have locked in an iconic "broken promise" every bit as damaging as "there will be no carbon tax ...." Indeed, it's arguably worse; precisely because of the fundamental and utterly incurable cognitive dissonance that sweeps over the average Australian every time he or she drives up to a petrol pump. If the price of petrol is, say, 20c a litre more expensive in a year because of a big fall in the Aussie dollar, to many, many motorists, it will be Abbott's tax. Who was the whiz-kid who decided to announce the petrol tax dodge on the same day the Prime Minister was launching his campaign for - vitally necessary - real and sweeping tax reform? Talk about cruelling your pitch. If you get people's back up over 40c a week, how do you expect to get them to support you over tax changes that might cost them $50 a week? How do you expect to get bipartisan support when you hand the Opposition a golden opportunity to go populist? THE history of tax reform is strewn with failure; it is critical to get that bipartisan support. Paul Keating couldn't even get it in his own party; John Howard all but lost an election over the GST and even then almost didn't get it up. Tony Abbott gave a very good speech to the Business Council on Tuesday night. He articulated very effectively why we need tax reform and he really put it to business leaders to take the lead in arguing the case. He also invited the Opposition to come into the tent - from the policy cold. This is a very, very different situation to the relentless campaign against Julia Gillard's carbon tax. A full and proper discussion on tax reform is not a "broken promise." Indeed, it is the specific delivery of a promise, with any proposals to change taxes to be taken to the next election. It is also about putting in place a tax structure that works not just for the country and all of us, whether as taxpayers or just citizens, but works for both of the parties of government. Labor should have just as much interest in rationalising and improving the tax system - and the way our Federation works, the associated reform path Abbott committed to embarking on. A better tax system works both ways. Yes, it would enable a government that successively cut spending to deliver real tax cuts. But it would also enable a government which embarked on greater spending to finance that spending more responsibly. One final point: apart from the idiocy of the sneaky petrol tax hike, it is not at all clear that indexing the tax to inflation is self-evidently "good tax policy," as all the so-called experts claim. Linking the tax to inflation is a form of, albeit overt, fiscal drag.