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tax

Ahead of the election, the Coalition’s first big barrage against Labor  — one presumably carefully prepared and timed with the intention of shaping the campaign within 24 hours of launching proceedings — is a claim that Labor will be a big-taxing government.

Documents purporting to be Treasury costings were circulated to media outlets to demonstrate that Labor would increase taxes by $390 billion over a decade compared to the government. 

Interestingly, neither of the outlets friendly to the Coalition ran hard with it. The AFR‘s John Kehoe noted that it was really a Coalition costing “via Treasury”. The Australian tucked it away on page 4. Both outlets have, ironically, run with other stories in recent days saying Labor’s policies will raise far less tax than Labor says.

Perhaps the Coalition should have made the number bigger — extrapolated it, Howard government style, to 2050. “$2.4 trillion in new taxes!” would have made for a better headline. What’s rich, of course, is that the Liberals are the party of big taxes in Australia, having jacked up the level of tax: GDP from 21.3% inherited from Labor in 2013 to 23.3% of GDP in the coming year — sucking a full additional two percentage points of Australian economic activity into government coffers.

The problem with throwing around number like $390 billion — let’s round it up to half a trillion for convenience — is that it’s meaningless for voters.

If the government wants to focus on tax as an issue, it has to personalise it, explaining how much more people will save in tax cuts under it than Labor. Except, it can only say that about high income earners who will benefit from the Coalition’s plan to reduce the progressivity of the tax scale in coming years (which is the bulk of the Coalition’s $390 billion figure, given Labor says it won’t do that at the moment). Low income earners get a little more from Labor than from the government and middle income earners get the same.

It also overlooks that people’s issue with the tax system, at least when polled, isn’t how much tax they pay. Everyone hates paying tax. But ask them what bugs them and they’ll say corporations and the wealthy not paying tax — the amount voters actually pay is far less of a concern than what others pay. Moreover, they feel that way no matter what way they vote. And while high income earners are more annoyed by how much tax they pay, it’s still not as big an issue for them as fairness

Ah, there’s that word. “Fairness”. In this campaign, it’s a Labor word. Scott Morrison might offer a conditional “fair go if you have a go”, but Labor is using it incessantly.

Their campaign slogan — impressively, the single most cliched political slogan of all time, in a very crowded field — is “A Fair Go For Australia”. There’s a “Fair Go Action Plan” (seriously). “Let’s build a fairer Australia”, it says. Labor shadow ministers use the word incessantly. By the end of the campaign we’ll probably be driving fair go electric cars and building fair go roads and getting fair go health treatment. And Labor specifically applies fairness to tax. Bill Shorten, in his first statement of the election campaign yesterday, hammered it:

“We’ve made serious reform decisions, to make sure that multinationals pay their fair share of tax. Australians are sick and tired of the big companies doing better and better and better, treating tax as an option, whereas everyday small businesses and medium-sized businesses or pay as you go tax payers, they just got to pay what they’re meant to pay and they don’t have the option — they don’t have the choice of opting out of our tax system.”

In point of fact, this government has made some progress in increasing the tax take from multinationals. But far too many large companies still pay, literally, no tax — or pitiful amounts that make the Australian tax system look optional if you have enough money.

In that context, the Coalition waving “Treasury modelling” (prepared by a department led by long-time Liberal staffer Phil Gaetjens) seems to miss the point. It does, however, play to the Press Gallery’s view of tax, that tax cuts have some innate political magic (the kind of view you’d probably have if you were a journalist paid a salary well above Average Weekly Earnings and living in a comfortable city like Canberra).

But pointing out that Labor is the party of higher taxes when voters think some major groups don’t pay enough tax is, at best, a curious way to frame the campaign.

Do you think the Coalition is onto a winner with this campaign tactic? Write to [email protected] with your full name and let us know. 

Peter Fray

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