by That’s the headline for my latest piece in Independent Australia . The next couple of weeks, leading up to Labor’s first budget, will determine the fate of this government, one way or another. If the tax cuts go through unchanged, the government will be a failure as far as economic and social policy is concerned. Some have suggested that the problems could be fixed in a second term. But having handed out big tax cuts for 2024-25, it’s absurd to suggest that Labor could turn around immediately and campaign on cancelling them. And, there’s no guarantee of a second term. While the LNP is looking pretty hopeless at the moment, an economic downturn would change things. Locking in the cuts would leave Labor with little or no capacity to respond to such a downturn. Modifying the tax
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That’s the headline for my latest piece in Independent Australia . The next couple of weeks, leading up to Labor’s first budget, will determine the fate of this government, one way or another.
If the tax cuts go through unchanged, the government will be a failure as far as economic and social policy is concerned. Some have suggested that the problems could be fixed in a second term. But having handed out big tax cuts for 2024-25, it’s absurd to suggest that Labor could turn around immediately and campaign on cancelling them. And, there’s no guarantee of a second term. While the LNP is looking pretty hopeless at the moment, an economic downturn would change things. Locking in the cuts would leave Labor with little or no capacity to respond to such a downturn.
Modifying the tax cuts, to keep only the elements that benefit middle income earners would have the political costs associated with a broken promise, but would reduce the costs of the cuts by around $12 billion a year. This would give the government sufficient room to respond to economic crises and address urgent needs.
Among those wishing to keep the cuts for higher incomes, the two main arguments are
(a) a promise is a promise
(b) people earning $150000 or $200000 a year aren’t “rich”
On the first point, while it would have been better not to make the promise to implement the cuts, it’s rarely possible for a government to keep all its promises. Labor’s promise to deliver higher wages has already been downgraded to a hope that real wages *might* increase over the next three years.
As regards “rich”, it’s a meaningless term which roughly means “makes much more money than me”. The fact is that only about 3 per cent of income-earners have a taxable income of $200 000 a year. This well-off group have less need for tax relief than the rest of the population
We need to keep the pressure up, in every way possible, until Budget Day