It is about as credible as believing the earth is flat, but there remains a common perception that the Labor Party is high taxing, while the Coalition is low taxing.
Mr Hockey’s budget last week smashed once and for all this perception with the simple fact that his own budget documents show how much Coalition governments rely high tax to pay for their pet projects.
As a share of GDP, Mr Hockeys budget documents show that the level of tax to GDP takes the following profile:
And even with that surge in tax revenue, the budget is still in deficit. Whoops.
Recall that in today’s dollar terms, 1 per cent of GDP is over $16 billion.
Let’s look at Labor. For the period of 2008-09 to 2012-13, when Labor were in government, the tax to GDP ratio averaged 20.8% of GDP and was always below 21.7% of GDP. The average tax take is approximately 2% of GDP lower than Mr Hockey is budgeting for over a similar time frame.
Give me my money back Joe!
If you think this is cherry picking the data, let’s have a look at the Howard government. Howard presided over a tax take that would make the Sherriff of Nottingham blush! The tax take hit a record high in seven years of the Howard government. It peaked at a record high 24.2% of GDP and averaged 23.4% of GDP.
Wow! Isn’t it easy to run a budget surplus when you are taxing the tripe out of the population?
OK, OK. Let’s look at Labor again – this time we can go back to the Hawke/Keating governments. The average tax to GDP ratio over the 13 year term in office of Hawke and Keating was just 21.8% of GDP, 1.5% of GDP lower than Howard, and in only two years of 13, did it exceed 23.0%.
So the facts show that the Hawke, Keating, Rudd and Gillard governments were low taxing and the Howard and Abbott governments are high taxing. Simple facts from Mr Hockey’s own budget papers. Have a look at Table 4 of Budget Statement 10. It’s all there.