Starting back in 1985 a succession of governments have rolled out a series of personal income tax cuts (mainly aimed at higher income earners), a trend that has continued right up to the present day. It was achievable without significantly affecting services or the level of government debt because for much of that time Australia experienced an extended mining boom that has poured billions of dollars into the government’s coffers which largely offset the revenue loss due to personal tax cuts. But mining booms are temporary while tax cuts are permanent. This loss of revenue due to personal tax cuts has been somewhat offset by the introduction of the GST, however these personal tax cuts have left us with a problem; Australia has largely an American style level of taxation with public expectations of a European style welfare and services infrastructure. Of course this is a somewhat simplistic view as there are many other factors in play that affect government revenue and expenditure. But the net result is that there is a perception amongst many politicians and economists that there is a need for tax reform, which will include increasing taxation at least in some quarters. However it will be a brave government that implements tax increases as one thing is certain; it is much easier to give tax cuts then raise taxes.
CARTOON REFERENCE NUMBER: 2025-38