Peter Costello slams Abbott tax plan as a ‘morbid joke’

FORMER treasurer Peter Costello has taken an extraordinary swipe at the Abbott government, sparking a war of words with Joe Hockey.

Peter Costello Liberal Party Dinner. Peter Costello with Tony Abbott

FORMER treasurer Peter Costello has taken an extraordinary swipe at the Abbott government, describing its pledge for “lower, simpler, fairer” taxes as some kind of “morbid joke”.

Mr Costello, writing for The Daily Telegraph, singles out Treasurer Joe Hockey’s proposed new bank tax and Assistant Treasurer Josh Frydenberg’s push for revenue from multinationals - as well as ideas from the Australian Greens and Labor.

“When the government released its discussion paper on tax it said ‘lower, simpler, fairer’,” Mr Costello writes.

Cop that ... Peter Costello and Tony Abbott at a Liberal Party dinner.

“Ever since we have been flooded with demands for taxes that are higher, more complicated, and less economic. ‘Lower, simpler, fairer’ is looking like a morbid joke.

“The government needs to restart the conversation about getting taxes down, not up,” he says.

Labor and the Greens didn’t escape a Costello serve, either, slamming the Opposition’s push for higher taxes on miners and media as potentially damaging.

He said using the tax system to redistribute income would trap Australians in poverty.

“The welfare system is the way to redistribute income...The tax system is there to raise government revenue at the lowest cost in the most ­efficient way doing the least damage to the economy.

“If you try to use both the tax and the welfare system to redistribute income you get punishing rates of income withdrawal as a person’s income rises.

“This creates a huge disincentive to work. It creates poverty traps. And, of course, it heightens the incentive to ‘hide’ additional income.”

Hold on there ... Treasurer Joe Hockey has returned fire.

Treasurer Joe Hockey this morning returned serve at Mr Costello, saying he wished he had the tax revenue the former treasurer had when the Coalition was last in power.

“Everyone’s entitled to give free advice and frankly, that’s what it’s worth - it’s free advice,” he told Sky News from New York, pointing to the abolition of the carbon and mining taxes. “I would suggest that people stop looking back to what it was and focus on the challenges of today and tomorrow, no matter who they are.”

Originally published as Peter Costello slams Abbott tax plan as a ‘morbid joke’