Election Facts: Which side taxes the most?

Sat, 16 Apr 2016  |  

It’s time to bring some facts into the tax debate. With the budget a couple of weeks away, the government seems hell bent on framing the budget around “lower taxes” and suggest that the Labor Party is all about “higher taxes”.

There is a problem with this claim – it is wrong. False. Incorrect. Erroneous.

If the budget on 3 May is to cut taxes back to the level under the low point in the previous government, that is 20.0 per cent of GDP in 2010-11, it will have to reduce the tax take forecast in MYEFO for 2018-19 to a massive 3.1 per cent of GDP or around $50 billion per year in today’s dollar terms!

I will walk from Parliament House in Canberra to Parliament House in Sydney if the Budget cuts the tax take to this level, ie 20.0% of GDP, carrying a satchel of 2016-17 budget papers on my back.

And the claim opens another fabrication on tax: Which side, over history, has the record on the highest and lowest tax to GDP ratios.

Hold on to your hats, because the facts are frankly, amazing.

Here are the Top 10 years of tax to GDP ratios since 1980-81and the government in power at the time:

2004-05  24.3% Liberal
2000-01  24.2%  Liberal
2005-06  24.2%  Liberal
2002-03  24.0%  Liberal
2003-04  24.0%  Liberal
2006-07  23.7%  Liberal
2007-08  23.7%  Liberal
1986-87  23.3%  Labor
1987-88  23.2%  Labor
2001-02  23.2%  Liberal

(Note: The Turnbull government gets an award for the next highest with the projected tax to GDP ratio of 23.1% in 2018-19).

Even more extraordinary are the facts of the 10 lowest tax to GDP ratios since 1980-81. All 10 are under Labor governments. All 10.

Here they are:

1992-93  20.0%  Labor
1993-94  20.0%  Labor
2010-11  20.0%  Labor
2009-10  20.2%  Labor
1991-92  20.7%  Labor
2011-12  20.9%  Labor
1983-84  21.0%  Labor
1994-95  21.2%  Labor
2012-13  21.5%  Labor
2013-14  21.5%  Labor

And the source for these numbers are the MYEFO released by Treasurer Morrison and Finance Minister Cormann in December 2015: https://www.budget.gov.au/2015-16/content/myefo/html/index.htm 

comments powered by Disqus

THE LATEST FROM THE KOUK

Memo to RBA – be careful what you wish for. House prices are falling

Fri, 19 Jan 2018

The recent house price data from Corelogic are showing further falls in house prices.

The falls are, disconcertingly, most evident in Sydney where prices have dropped 0.5 per cent so far in January, which brings the aggregate fall since the September 2017 peak to a chunky 2.9 per cent. This means that for a $1 million property in September, the value has fallen $29,000 in just 4 months.

The house price weakness is not confined to Sydney.

In Melbourne, the Corelogic data shows house prices topping-out. Prices are down 0.3 per cent from the December 2017 peak which, to be sure, is not a large decline after the stunning increases of previous years, but a fall it is.

I'm out of the hammock to look at some facts about Australia's labour market

Thu, 18 Jan 2018

There was another round of euphoria as the monthly labour force data hit the screens. The data showed a nice 34,700 rise in employment in December which brought the total rise in jobs in 2017 to 403,100.

This is good news, to be sure, but how good is it really? What is the context for this increase in employment and how is Australia going in an ever vibrant and dynamic global economy?

Of some concern, Australia’s unemployment rate remains at 5.5 per cent – it actually ticked up from 5.4 per cent the prior month. Interestingly, and something less favourable, is the fact that the unemployment rate has been below 5.5 per cent for just two months (October and November 2017) in the last four and half years. Where is that 5 per cent or lower full-employment target everyone reckons we are near?

What’s more interesting, and a sign of the policy sloth that Australia is enduring at the moment, is that around the world, unemployment rates are falling and are impressively low.

Sure each country will have its quirks but have a look at our 5.5 per cent against these countries.