With an election looming in May, the last subject either leader wants to raise is the idea of an inheritance tax, especially with the memory of how Scott Morrison surprisingly won the last election nailing Labor’s Bill Shorten on his tax-slugging of retirees. Now, incredibly, a Liberal MP has inferred that money handed down from parents to kids is lazy money that should be taxed!

There are only two good aspects to this story for the PM and Treasurer Josh Frydenberg, who reportedly are fuming over the revelation. Firstly, the MP has backed down on his position, and second, no one has ever heard of Jason Falinski!

After this big mistake, we might soon forget who he was, except that he’s in the safe seat of Mackellar — the old bastion of conservative maven, Bronwyn Bishop. Bronny might not have always understood what modern Australia wanted but she really understood what Libs wanted, especially before an election!

What makes this worse for Jason is that the PM and Josh were starting to warn us that Labor would come at an inheritance tax, citing a 1991 speech of Anthony Albanese where he supported the move.

Let’s be fair on Jason. He now says a tax on inheritances is “double taxation”, but plenty of tax experts agree with his idea that if inheritances were taxed (as they are in many overseas countries), then income taxes on individuals and on companies could be reduced.

The AFR says in 2018 about $120bn was passed to the descendants of older Aussies. And baby boomers will pass on $224bn to their relatives by 2050!

Here in Australia, there’s a 17% inheritance tax on super but smart financial advisers can even reduce that. Tax experts say one day this country will have to think about copying the rest of the world by hitting taxes on inheritances.

But these same tax experts also say we need a GST of 15%, which would substantially cut both personal income taxes on workers and small businesses, as well as reducing the company tax rate.

Imagine trying to sell an inheritance tax and a 15% GST at an election to fix up our internationally odd tax system. Most overseas tax regimes are heavier on their equivalent GST or VAT taxes but lighter on income tax compared to Australia.

Deep down I’d bet Jason would like a 15% GST but like Josh and his Labor rival Stephen Chalmers, he knows it would be near impossible selling it to voters during an election campaign.

In the SMH, Jessica Irvine reminded us that we nationally ditched death taxes in the 1977 election, when “both Gough Whitlam and Malcolm Fraser promised to follow suit with state premiers and abolish the federal death duty – a promise later fulfilled by Fraser as prime minister in 1979”.

Right now, 24 out of the 37 member countries of the Organisation for Economic Co-operation and Development (OECD) have inheritance taxes.

And what about South Korea, which has a 50% slug? This saw the family of Samsung’s chairman Lee Kun-hee pay $14bn after he passed away!

And if you like the idea of taxing the ‘filthy rich’, check this out from Jessica: “…according to a Productivity Commission research paper released in December, 2021, richer parents do leave bigger dollar sums to their children, but as a proportion of the child’s existing wealth prior to receiving an inheritance, it is lower- and middle-income children who benefit the most.”

As I said to Ben Fordham on 2GB, if a nurse or council worker along with their brothers and sisters are left their parents’ home and they end up with a $200,000 windfall each, it has a huge impact on their overall wealth, their life and retirement. And by the way, if you simply taxed the wealthy on the assets they hand down, Treasury would not raise enough taxes to justify the heat any party would cop at an election. If one party supported a tax on the wealthy, the other party would simply say that this move was the “thin end of the wedge”, implying that it’s the rich today but it will be your inheritance tomorrow.

I don’t think Jason Falinski will ever forget this gaffe, and I don’t think I will ever forget him either.