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

My house price bet with Tony Locantro - an update

Mon, 01 Apr 2019

This article first appeared on the Yahoo Finance web page at this link: https://au.finance.yahoo.com/news/aussie-property-crash-looking-even-unlikely-heres-021138614.html 

----------------------------------------------------

My house price bet – I’m very happy and getting ready to collect

I recently made a bet with Tony Locantro, Investment Manager with Alto Capital in Perth on the extent to which house prices would fall over the next three years.

Just to reiterate, the bet centred on Locantro’s view that prices would drop 35 per cent or more by the end of 2021 from the peak levels in 2017, a forecast that looked absurdly pessimistic given the raft of factors that influence house prices over the course of years.

For Mr Locantro to win the bet, house prices measured by the Australian Bureau of Statistics on a quarterly basis in either Sydney, Melbourne or for the average of the eight capital cities would need to fall by 35 per cent or more from the peak levels by the time the December quarter 2021 data are released. The ABS released the latest residential property price data last week which presents an opportunity to see how the bet is unfolding, admittedly with three years to go until it is settled.

As everyone knows, house prices are falling in most cities, reversing part of the boom over several decades.

Get ready for a cash rate cut in April

Mon, 25 Mar 2019

This article first appeared on the Yahoo Finance website at this link: https://au.finance.yahoo.com/news/get-ready-cash-rate-cut-april-193244245.html

----------------------------- 

Get ready for a cash rate cut in April

The data is in and it is compelling.

The Australian economy is faltering and the risk is that it will weaken further if nothing is done to address this decline.Not only has there been recent confirmation of a per capita GDP recession – that is, on a per person basis the economy has been shrinking for two straight quarters – but inflation is embedded below 2 per cent, wages growth is floundering just above 2 per cent, house prices are dropping at 1 per cent per month and dwelling construction is in free fall.

Add to this cocktail of economic woe an unambiguous slide in global economic conditions, general pessimism for both consumers and business alike and a worrying slide in the number of job advertisements all of which spells economic trouble.Blind Freddie can see that there is an urgent need for some policy action. And the sooner the better.For the Reserve Bank of Australia, there is no need to wait for yet more information on the economy.

It has been hopelessly wrong in its judgment about the economy over the past year, always expecting a growth pick up “soon”. Instead, GDP has all but stalled meaning that inflation, which is already well below the RBA’s target, is likely to fall further.In short, no. It is not like a 25 basis point interest rate cut on 2 April and another 25 in, say, May or June will reignite inflation and pump air into a house price bubble.

Such a claim would be laughable if there are any commentators left suggesting this.