Federal

Apr 26, 2018

A dose of perspective on our big-taxing, big spending government

The government's foreshadowed tax cuts only come after the Liberals have again confirmed that they are the big-taxing party of Australian politics.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Perhaps it's laziness, but much of the coverage of the government's suddenly discovered extra tax revenue, which has enabled it to ditch last year's NDIS-linked Medicare levy increase, has focused on the politics of which side can propose what personal income tax cuts. True, the government has traded the eccentricity of abandoning what it paraded as a moral duty just twelve months ago -- paying the increased levy was each Australian's responsibility to their disabled fellow-citizens -- for the arguably greater eccentricity of telling everyone in two weeks' time they were getting a tax cut while also having a tax increase left over from the 2017 budget.

But the whole discussion starts from the wrong point -- a point created when journalists accept the Liberal Party's claim to be the party of lower tax. It's not merely that, under Hawke and Keating, tax as a proportion of GDP only exceeded 23% in two years, while under Howard it exceeded 23% in seven years. It's that, under Tony Abbott and then Malcolm Turnbull, tax has averaged 21.8% of GDP (including this year, which is likely to see a rise from the MYEFO forecast) compared to an average of 21.3% for the Labor years, if you include 2007-08, which saw the last strong tax revenue before the financial crisis. Maybe 0.5% doesn't sound much, but in current dollars that's over $9 billion a year. 

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5 comments

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5 thoughts on “A dose of perspective on our big-taxing, big spending government

  1. Arky

    Well said Bernard, and we’d all be better off if you pasted this on the walls of whatever tea rooms the press gallery uses in Canberra. Your colleagues tend to be innumerate, incapable of understanding statistics and probability, and far too prone to just following a set narrative.

    The Liberal Party as better economic managers, as the lower taxing lower spending party, as the lower interest rates party, these are Howard myths which journalists have proven incapable of giving up no matter how often actually numerate journalists have demonstrated they are untrue.

  2. Woopwoop

    So what did Abbott and Hockey splurge on? it certainly wasn’t health, education or infrastructure.

    1. Geoff Thomas

      They spent the money on tax concessions, exemptions, etc. The cost of the 13 largest concessions such as GST exemptions, capital gains tax discounts, the principal dwelling exemption and preferential treatment of superannuation will be $148.62 billion for the year ending 30 June 2018, an increase of 12.4% over the preceding year. Compare that with the rate that wages are increasing, and remember that we are told the deficit could be around $23.6 billion for the 2017 – 18 financial year. In reality, the deficit is being paid off by bracket creep. We are being ripped off a treat by this government.

  3. AR

    I heard the Abbottrocity last week and Dunnuttin today – both doing obeisance to Rat Hately – claim that the Rodent reduced immigration from the levels during Labor’s term in office which is totally untrue.
    Last year of the Rodent was 235k, the average during Krudd-G-Krudd interregnum was 210K (range 195-230k) and has been well over 210K since 2013.
    The forgotten/ignored number is 457 visas – not dissimilar to settler immigration in numbers but, hey they’re only temporary!
    Remember when they were Working Holiday visas for UK/Irish backpackers under 25 to pick fruit?

  4. ralph

    “Much less ammunition” – absolute tosh. The “store of ammunition” is an accounting fallacy – it’s a ledger entry – and in any case if I recall there was no shortage of takers for government bonds at the height of the GFC.

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