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Want your stage three tax cuts in 2024? Fair enough — just explain which spending or taxation needs to change to pay for them.
It’s important to remember, as seemingly few do, that the stage three tax cuts were legislated in 2019 when the budget was expected to enter surplus the following year. Instead, the Morrison government dramatically increased spending and permanently expanded the size of government, not just in the pandemic but projected deep into the 2030s.
Any discussion of the tax cuts beyond the respective levels of the Greens (tax cuts are bad, we need more tax, lots more, now) and the Financial Review (trickledown economics works, the only things wrong with the economy are taxes are too high and we pay workers too much) needs to grapple with this change in circumstances.
That makes life easier for the Greens and other critics of the tax cuts: they are the ones adopting a position of fiscal responsibility. We have decided — all of us, including the Coalition — that the federal government has needed to increase in size from approximately 24.5% of GDP to 26-27% of GDP (i.e. an increase of more than 5% in the total spend). So how will we pay for it? For starters, by not giving ourselves a big tax cut in 2024.
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