Finally some sensible economics from Australian Chamber of Commerce and Industry CEO Peter Anderson, who says that payroll tax acts as a disincentive for businesses to employ people.

"I think we have to get beyond that simple blocking device and say 'let us apply some national thought to this' because it will pay off in the longer term if as a nation we are not taxing employment," he said. -- from the ABC.

Tax is a disincentive? Who would have thought. Having half of my income taken away before I can touch it really encourages me to work harder. Likewise, as Mr Anderson correctly says, any tax, legislation or regulation that increases the cost of labour for businesses will create unemployment. Just read yesterday's post on the minimum wage for an example of how artificially increasing wages above market level causes unemployment.

Mr Anderson says he is aware the move would not be popular with the states, and he would expect state treasurers to immediately complain about having to cut services.

It won't be popular at all with the states; they love forcibly collecting free revenue from their people as much as every other bureaucrat. Every tax cut made by the state will have to correspond with a cut in the 'level of services' because if it doesn't then they will have to borrow (backed by future tax hikes) or inflate the currency (a ruthless form of taxation) to recover this lost revenue.