The government has been so bad at articulating exactly what it wants to achieve with tax reform that it’s not surprising to learn voters are completely confused about it. Today’s Essential Report, published by Crikey, shows that most voters believe one of the main goals of Turnbull’s tax reform is to fix the budget deficit — even though the government has repeatedly indicated it is not interested in increasing revenue.
In fact, the government appears to be primarily focused not on delivering a better tax system, or on encouraging economic growth, but on giving voters a tax cut before the next election. Media reports today suggest that, having abandoned a GST rise, the Coalition is now seeking to scrape together enough funding from (welcome) cuts in superannuation tax concessions and reductions in workplace deductions to give voters a tax cut.
This is ostensibly electorally appealing — but in truth voters identify fairness and complexity as their biggest concerns about the tax system, not how much they pay. And how responsible is it to be pursuing income tax cuts? The government repeatedly talks about bracket creep, but wages growth is so slow that many workers can only dream of being pushed into higher tax brackets. And the solution to bracket creep is simple, anyway: just index income tax thresholds and no one need ever worry about it again.
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But at a time when our deficit remains stubbornly around $30 billion to $40 billion a year despite the efforts of both Liberal and Labor treasurers, and our net debt continues to mount into the hundreds of billions of dollars, it is hardly the time for Australians to be rewarding themselves with yet another tax cut. And that’s all the more the case given how little interest the Coalition government has shown in cutting spending.