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. As a part time working mother, I seem be a key target audience for Howard and Costello’s proposed tax cuts.

    Given this governments appalling record of Family Allowance discrimination against working mothers, it is a joke that they can now try to win my vote. Better that there be a overhaul of the Family Allowance system to provide a fairer system.

    Of my fortnightly income, I bring home slightly over half when I take into account the tax, cost of childcare and the loss of Family Allowance.

    Single income families, where the mother does not work at all, can earn more than double the combined income of my partner and I and still get maximum part B family allowance.

    I work because we need the extra income to survive and pay the mortgage on the very modest home we live in. I hate having to leave my child, my job is unrewarding, the travel time is tedious… I have all this to go through and then I lose the Family Allowance …

    My advice to Labor is don’t offer tax cuts. Use the money to fix Family Allowance, Education, Health etc etc…. Provide the safety net that should be provided by government.

    Tax cuts will be matched by price rises and interest rate increases. Inevitably the tax cuts offer greater benefit to the higher earners and the divide between rich and poor increases.

  2. @ 358 Just Me,

    I’m a bit behind the conversation I know but what the Liberals have done is get Treasury to write their tax policy. This means they need to release it as Government policy while they are still officially the Government. That is why the tax policy has been announced so early.

    Clever move on their behalf, cuts down the risk of any gaffes if Peter Costello was forced to write his own tax policy.

  3. Talkback radio callers say no to tax cuts

    Prime Minister John Howard and treasurer Peter Costello will be surprised to learn that callers to talkback radio this morning were overwhelmingly critical of the federal government’s $34 billion tax cuts package that they announced yesterday.

    Media Monitors analysis showed calls on what The Age presented as a “bold initiative” that left Opposition leader Kevin Rudd “flat-footed” (The Australian) ran almost four to one against the government.

    Of the 55 talkback calls this morning on the topic, 42 were negative, six were balanced and seven were positive.

    On ABC radio North Coast, caller Peter said the promised tax cuts meant more consumption of material goods that would lead to further global warming.

    On commercial radio stations, the proportion of callers criticising the tax cuts was lower than on ABC radio but still ran strongly against the government.

    On 2UE in Sydney, caller Ron asked how the tax cuts would help old age pensioners while on John Laws’ 2GB program caller Margaret said the tax cuts would have been better spent on improving hospital services.

  4. GST increases…..If Rudd and his cronies get in, and if they stuff up economically like previous Labour Governments it will be an easy fix for them to increase the GST for top up funds. A labour win now will be the first time that all states and the feds are of one political persuasion thus enabling a unanimous vote to increase GST – a requirement under the GST legislation.

    Why haven’t any commentators, journos started asking about this scenario??

  5. Scare campaigns on the GST forget to mention who it was that introduced it to begin with. Before it was introduced there was a 0% GST. Now there’s a 10% GST. Yet we’re meant to get scared about the ALP increasing it and not angry with the Coalition for introducing it?

  6. Paul Says: @ 404

    {Why haven’t any commentators, journos started asking about this scenario??}

    They already have Paul and Rudd said that it would be over his dead body.

    You should spend less time flitting across various web sites posting this sort of nonsense and a little time reading.

    But, I know you won’t. Trolls only know how to post from Liberal talking sheets.

    They don’t have the time or ability to infirm themselves by following what is happening out in the real world.

  7. Happy if Rudd and labor said they would maintain status quo on tax until after they get in and can inspect the books before deciding on any changes to tax.

    Last time Howard lost office as Fraser’s treasurer he kept secret the largest deficit in Australia’s history. The Howard government has been the most secretive, especially in the withholding and distortion of information that should be publically available.

    Before any company takes over another they are allowed an detailed inspection of the books to ensure that what they are buying is as portrayed.

    This should aplly in politics, allow labor unlimited access to the books so that there is no nasty surpreises like before when they take government.

  8. The problem with Quiggin’s assessment is that the Coalition has a proven record on tax reform and economic management.

    After five consecutive rounds of tax cuts, there’s no reason to believe that the Coalition can’t deliver additional cuts next year through 2012.

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