Tax: the best form of defence

The Coalition has today adopted a shock-and-awe tactic to kick-start its election campaign: promised income tax cuts to cost $34 billion over three years, accompanied by aspirational talk of an Australia in which 98 per cent pay a marginal tax rate of 35 per cent or less. I won’t presume to discuss the promise’s target market at this point, but it should be noted that tax cuts at the past two budgets produced largely disappointing returns in the opinion polls (although the more recent round can be credited with a slight narrowing in Labor’s lead in August and September). Nonetheless, the announcement will fill the news bulletins with images of Peter Costello in his element, whereas Kevin Rudd will be forced to discuss those tax scales he couldn’t name a few weeks ago.

Centre-left economist John Quiggin makes the following observation on the troubled history of election tax cut promises:

I can recall (perhaps with error) at least two instances of such cuts being promised and then taken back. One was Paul Keating’s L-A-W tax cuts in 1993, which (as implied) were actually legislated in an attempt to increase their credibility. The other was the “Fistful of Dollars” tax cut of 1977 (so named for the ads which showed precisely that) promised by the Fraser-Lynch team going into the election and then (if my fading memory serves) taken back by Lynch’s newly-appointed replacement. Now what was his name again?

Author: William Bowe

William Bowe is a Perth-based election analyst and occasional teacher of political science. His blog, The Poll Bludger, has existed in one form or another since 2004, and is one of the most heavily trafficked websites on Australian politics.

409 comments on “Tax: the best form of defence”

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  1. 47
    Flash Says:
    October 15th, 2007 at 7:35 pm
    That is quite devastating, I reckon.
    Howard doesn’t even know what interest rates are – the most crucial figure in the entire economic equation, for the ordinary punter. And this on the very day when he has arguably taken a step that could bump them higher. I assume this blunder could well overshadow the tax cut announcement since it goes to the very core of much economic pain out there.

    Do you reckon they will sensationalise it the way they did Rudd for not committing tax scales to memory?

  3. This is risky stuff from the Rodent and Smirky. If the polls don’t improve in the next week or so, their gamble will have failed and they will be well and truly screwed.

  4. [Do you reckon they will sensationalise it the way they did Rudd for not committing tax scales to memory?]

    I think it will get a mention because Howard is meant to be the guy who keeps interest rates low. The fact he doesn’t know the interest rate makes it pretty easy to make fun of his claim.

    He didn’t look too impressed at the end of the interview!

  6. Kina.. I think they should. Getting the interest rate wrong, which is a single very important figure, is a bigger blooper, in my humble opinion, than being unsure of the various tax margins.

  7. Marky a lot of voters watch ACA, generally I dont but when I knew the candidates were on I thought I would watch.

    If you saw the PM’s face you would have thought he had wished the ground would open up and swallow him, it was a major error on his part, makes him look out of touch and an L Plater economically

  8. If the tax cut helps the LNP a little then too bad. Labor needs to think of a 6 week plan.

    I wonder how $10 billion on hospitals and $15 billion tax cuts for middle-lower wage earners would go etc..

  10. Bad footwork by ABC researchers not to be across Howard’s ACA blooper to follow up in Kerry O’Brien interview (which I think is live).

  15. Howard was in a bad mood on 7.30 Report, very snarky and irritable!
    On what is supposedly a bad day for him, Rudd looks far better, at least in my biased opinion.

  16. Aussieguru01 Says:
    October 15th, 2007 at 7:48 pm

    I love Kevie…but it annoys me when he doe’s the finger count off!

    LOL, it may annoy you but animation is good presentation for the punter. Better than sitting there like a smug Howard, err I mean dummy 🙂

  19. [Howard was in a bad mood on 7.30 Report, very snarky and irritable!]

    That’s what a gaffe on A.C.A. does to you. He would’ve prefered to bugger up on 7:30 Report, because less people watch it.

  21. I am absolutely under-whelmed by these talks of tax cuts. The last lot went whoosh in to higher interest rates even before I had the opportunity to smell the crisply minted notes.

    This weeks inflation figure is the numebr to watch.

    This time around the tax cuts will be gone before you get them.

    It is a real class act to spend $34 billion and not have a cracker to show for it.

  22. Howard is looking cantankerous, snarly and resentful that he’s not getting his usual free and cosy ride from interviewers. I honestly can’t see him lasting the distance this time around.

  23. OK I will watch the 7.30 report when it comes on. Like to see Kev on fire – hopefully some quotes to make the papers and radio.

  26. “It is a real class act to spend $34 billion and not have a cracker to show for it.”

    How much more useful to apply $34 billion to Hospitals, health and education!

  28. Must say this is the best i have seen Rudd.. straight to the point and with facts.. and the hands well actually it is a good thing to use your hands because it shows you have knowledge.
    On many other occasions i have seen Rudd he has had the Beazley’s about him and tended to waffle…

  29. Howard & Costello have squadded over $400 billion in revenue by vote buying instead of investing in our country inferstructure & training up young Australians. We have a huge skill shortage & all we get is bribes.

    Shame Howard…SHAME!

  30. I know you will all disagree with me but I thought Howard was pretty feisty and by comparison the interview with Rudd was a bit dull. It was like Howard was the young guy with the fire in his belly and Rudd was the wise old man putting everyone to sleep.

  31. Evening all.

    Fair dinkum…. Settle petals,

    This a 34 billion dollar headline.That’s its purpose (if its not, these guys really are off with the fairies).

    Tell me this – if you are a second income earner in a 1.5 income household where you once earned $25,000 a year, but now earn $22,000 a year because of the loss of penalty rates and overtime due to Workchoices, would you change your vote *_BACK_* to the Coalition because they are promising you an extra $14 a week in 3 years time?

    Would you switch your vote back because the government has promised to give you back 25% of what you’ve lost because of Workchoices?

    Would your other half do the same?

    No.

    The problem with 34 billion dollar tax cuts is that when they breakdown to low and low-middle income earners, they mean jack sh*t when balanced against Workchoices, the fear of workchoices, the cost of childcare, increased housing costs (be they mortgage or rental costs) and how those things combine to reduce discretionary income which funds lifestyle and perceived standards of living.

    This isnt meant to buy votes, its meant to buy headlines, to change the media narrative and to give the government space to run other campaigns to buy votes.

    If the government and its advisors actually believe this will help them change votes over the full length of the campaign, Howard is eyeball deep in the brown stuff to a greater level than we’d all previously thought. (Except for you Gus, with your visions of 1993 Canadian madness 😉 )

    Rudd doesnt need to change his plan and his policy release timing to deal with this.He certainly doesnt need to ‘me-too” $32 billion up the wall the to achieve three fifths of five eighths of sweet f**k all.

  34. The PM doesn’t care about interest rates they don’t affect him, that’s why he doesn’nt know them.

    If he had a mortgage he would know and care, proves he’s is out of touch with the real world

  35. Poor performance by KR – this guy has been calling for an election for months and the best he can do is trot out cliches like “I am proposing new leadership”.

    Surely Surely Labor is sitting on a tax policy, tell me they werent so arrogant as to not have even prepared one? To not even be able to name a date for its release? – ha ha – there goes the first week or two of the campaign for KR.

    Do you know on what he is basing the claim that he has barristers on his front bench???

    Basically he points to 3 people to refute the Labcest problem – KR himself, Craig Emerson and Peter Garrett. The problem with Labcest is not going to go away it seems ……….

  38. Howard really struggled to counter any of Kerry’s challenges. His attempt to claim that the increased health spending by the states is because of his government and the GST was a ripper – he seems to have forgotten that the states gave up most of their own tax revenue streams in exchange for that.

  42. Well said possum!

    And Howard was as dreadful as I have ever seen him on the 7.30 Report. He is in real danger of losing it completely.
    By contrast Rudd was assured, confident and relaxed.

  44. [Do you know on what he is basing the claim that he has barristers on his front bench??? ]

    Joe Ludwig, (shadow attorney general) was a barrister. I think so was Robert Mclleand.

  46. I’ll be the first to disagree with you Paul K. I thought the PM was defensive, probably unsettled by being de-railed by someone like the lass from ACA, and KR spoke well, to the point, not about to be rattled by the “Great Tax Cut” lurch into the unknown of the impact on interest rate rises, we’ll have a look at how it works with our tax modelling and get back to everyone when we’ve responsibly done an analysis. Oh, and nice wedge between Howard and Costello built in to the commentary. Bewdiful!

  48. William, it is not an election commitment. Because the tax cut appears in the Mid-year Economic and Fiscal Outlook Statement (MYEFO), it is existing government policy. If Labor wins but decides not to give the tax cut, they will need to announce it as a savings measure in next year’s Budget.

  49. Joe Ludwig was part of the AWU just like dad.

    AG01 – nah mate – there seems to be some outrage that JWH is actually fighting back. It seems some of you were expecting him to just cop a good old fashioned whopping without a fight. Your going to have earn it.

  50. #85
    Who wants barristers anywhere within a political party? A number of the most highly paid barristers seem to earn it by convincing judge and jury that high level crims aren’t crims at all, or getting them off by finding obscure legal loopholes (See the case of the ‘gentleman’ from Perth who ‘won’ the America’s Cup, as a good example of the barrister’s trade!)

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