With hospitals out of the way, will Rudd turn to taxation?

Now for hiding tax changes. Whether it is real or imaginary does not really matter. Kevin Rudd has achieved enough at his COAG meeting to defuse health and hospitals as an election campaign negative for Labor. If the scheme falls over it will not be his fault but that of a recalcitrant Senate or a stubborn West Australian Premier. The allegation that the Prime Minister is all talk and no action when it comes to ending the blame game on this issue is now well and truly blunted.

Which leaves one major problem: taxation. Getting the Secretary of the Treasury Ken Henry to review the whole sweep of taxation measures is one of those things that might have seemed the right thing to do at the time. When the pressures of an enlarged budget deficit make actually reducing the tax burden impossible, releasing the report becomes something of a horror. Changing taxes in this environment means creating losers and almost certainly more losers than winners. And losers vote against you.

No wonder that the Henry Report is still being kept secret. Spinning it out of relevance will not be an easy task and Prime Minister Rudd clearly will need some help – help that may just arrive in the form of a report prepared for the IMF.

Tough proposals to cut the world’s biggest banks down to size by taxing their profits and pay were outlined by the International Monetary Fund tonight, reports the London Guardian, in an attempt to spare taxpayers another massive public bailout of the financial sector.

In measures more stringent than Wall Street and the City had expected, the fund called for the introduction of a twin-track approach to the three-year banking crisis that would both force firms to pay for any future support packages and raise new taxes on their profits and remuneration.

The report, prepared by the Washington-based institution for the G20 group of developed and developing nations, was seized upon by Gordon Brown as evidence that his push for an international crackdown on the banking sector was gaining support.

What could be a better smokescreen for a local report on taxes that a government does not want debated than to have a bit of bank-bashing by imposing new taxes on them?

Something for Liberals too. Not that the IMF is other than politically even handed. Its Global Financial Stability Report released overnight warns that the sharp rise in government debt during the economic crisis from already elevated levels helped create what the IMF says is the newest threat to the financial system: growing sovereign risk. That kind of comment should be right up the alley of shadow Treasurer Joe Hockey who is trying harder and harder to make the size of the budget deficit into the key election issue.

A summary of the IMF’s financial stability report

The love of bad news. Don’t economic journalists just love the prospect of delivering bad news to their readers? Once again the monthly minutes of the Reserve Bank Board have been used as a peg for yet more stories about mortgage rates having to rise again. That the markets have not yet reached quite the same conclusion as the public commentators is shown by this morning’s Crikey Interest Rate Indicator:

NSW Premier the biggest winner. Kristina Keneally might not be capable of single-handedly turning NSW Labor from certain losers into winners but she is surely doing well enough to prevent the wipeout that looked likely before she became Premier. Another most assured performance from her at the COAG meeting and I am sorely tempted to have a little of the odds on offer about her pulling off that impossible victory.