In the traditional pre-budget bad news drop, Prime Minister Gillard will today reveal a $12 billion hole in tax revenue.
Back in December, the government was still insisting it could deliver a surplus based on the anticipated tax take. But if it was questioned before, it's been proven now: the nation's tax base has still not recovered from the GFC, and shows no sign of repairing itself.
Anyone expecting today's news to provide an opening to talk seriously about tax will be disappointed though. (You'll have to read Judith Brett instead.)
Gillard's key message today is that she intends to push ahead with the NDIS and Gonski funding reforms, regardless of the budget position. It's a counterintuitive tactic by the government: the talk of more spending plays straight into the hands of the Opposition, which is of course pushing the line that Labor's spending is out of control. But the hole in this budget is from reduced revenue, not spending.
Labor's leadership, employing anti-austerity rhetoric, has evidently decided that anything is better than addressing the revenue gap in the lead up to the election. The "new economic reality" is being mugged by political reality.
Nick Feik Politicoz Editor
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Budget Hole Hits $12 Billion
“Federal Treasury has told the Gillard government that weaker revenues will slice $12 billion from the budget bottom line this financial year, but the Prime Minister says the government must continue with plans for big increases in education and disability spending.”
It’s Only Super Till You Die
“Taxing super is not quite the same as taxing an inheritance, but it is in the same end-of-life territory, and so arouses similar fears of the approaching end. It also arouses the second of the powerful emotional clusters mentioned above: the virtues of saved money.”
“With only finite revenue, a decision to give to one individual or group means, by definition, that another will miss out. What is surprising is the extent to which Coalition policies will result in a significant redistribution of wealth upwards rather than downwards. Consider the following Coalition policies.”
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