Albanese's Dangerous Tax Proposal

The taxes every day Australians are paying are apparently not enough, according to Shadow Minister for Transport and Infrastructure, Anthony Albanese.

He writes "The nation faces a serious infrastructure deficit. Our roads, railways and ports are inadequate to meet the demands placed on them by a rapidly expanding population. The results are traffic congestion, loss of productivity, and reduced business activity and job creation. Indeed, industry body Infrastructure Partnerships Australia estimates we need to invest at least $700 billion in major projects to address this deficit."

What he's really saying is that the taxpayer should foot the bill for a project as big as this. Whilst a good idea in theory, Michael Potter, economist for the CIS explains "While infrastructure investment is beneficial, there are no indications that governments take these decisions better than the private sector. Australia really didn’t need more public investment in pink batts, which worked so well under the government Mr Albanese was part of."

There are so many things wrong with his next argument that it's hard to tell where to begin. He says the Howard government was "a failure" because it "spent $314bn on tax cuts or pre-election handouts." 

First of all, any government that implements tax breaks for whatever reason on whoever it may be is a good thing for the economy. To call it a failure is a deep misunderstanding of what drives a nation's growth; not the decision making power of bureaucrats but the working efforts of individuals.

Secondly, from a purely pragmatic perspective as Michael Potter notes, "governments don’t ‘spend’ money on tax cuts – instead they are reducing the amount they take from household budgets." Anyone with a basic economic background should know this - particularly thos"tax levels were at record highs under the Howard administration."e handling our finances on a federal level.

Thirdly, to reduce tax cuts as "pre-election handouts" shows that Albanese simply has no idea what a hand out is. It is not "a handout" to give back what belonged to the people in the first place. A handout is when a government actively redistributes income that isn't theirs to people who don't deserve it. Sort of like $700 billion he's planning to snatch from us.

Fourthly, and perhaps this is the most important point, Albanese's criticism against John Howard's tax cuts doesn't add up as "tax levels were at record highs under the Howard administration." According to data from the Parliamentary Budget Office, the government’s tax to GDP hit 24.15% in 2000-01, but the record was broken when the tax to GDP ratio hit an all-time high of 24.21% in 2004-05.

It is somewhat ironic then, that if Albanese's assertion were true, we'd all be better off now.

 

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