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 

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THE LATEST FROM THE KOUK

Why Australians have lost $300 Billion this year

Mon, 22 Oct 2018

This article first appeared on the Yahoo 7 website at this link: https://au.finance.yahoo.com/news/3665708-004156966.html 

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Why Australians have lost $300 Billion this year

The total wealth of Australians has dropped by close to $300 billion since the start of 2018.

How much of that is yours?

The fall in house prices and now the slump in the stock market is undermining the wealth of Australian householders.

This is an important trend given the solid link between the change in wealth and household spending. Numerous studies show that when wealth increases, growth in household spending is faster than it would otherwise be. It appears that householders view their extra wealth in a manner that sees them lower their other savings or use that wealth as collateral for additional borrowing fund extra consumption. They may even ‘cash in’ their extra wealth and use those gains to fund additional spending.

When they observe falling wealth, experience weak wages growth and realise their savings rates are perilously low, they will adjust their spending – down.

Labor almost home, not quite hosed

Mon, 22 Oct 2018

The extraordinary vote in the Wentworth by election, with the 18 or 19 per cent swing against the Liberal Party, presents further evidence that the Morrison government is set to lose the next general election.

There is nothing particularly new in this with the major nation-wide polls showing the Liberal Party a hefty 6 to 10 points behind Labor.

The election is unlikely to be held before May 2019, which is a long 7 months away. A lot can happen in that time but for the Liberal Party to get competitive, but for this to happen there needs to be a run of extraordinary developments.

In the aftermath of the Wentworth by election, the betting markets saw Labor’s odds shorten.

While the odds vary from betting agency to betting agency, the best available odds at the time of writing was $1.25 for Labor and $4.00 for the Coalition.

If, as most now seem to suggest, Labor is ‘across the line’, $1.25 is a great 25 per cent, tax free return for 7 months ‘investment’. Yet, punters are not quite so sure and seem to be holding off the big bets just in case something out of the ordinary happens.

While some segments of the economy look quite good, at least on face value – note the unemployment rate and GDP – others that probably matter more to voters – husong, share prices, wages and other high-frewquency cost of living issues are all looking rather parlous. And none of these are likely to change soon.

There is an old saying for punters – odds on, look on. But $1.25 for Labor seem great value.