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Tax and cut: a very modern oxymoron

14 May 2018

1:01 PM

14 May 2018

1:01 PM

For a week now our newspapers have been ablaze with news stories and poll analysis celebrating the government’s announcement of tax cuts. Unfortunately, the joining of the words tax and cut has become a modern oxymoron, a figure of speech in which apparently contradictory terms appear in conjunction.

A tax cut used to mean the amount of tax paid would be less than was paid in previous years. In modern political parlance, it now means that the planned increase in your future tax obligations is less than the political elite was originally expecting to charge you.

Sure, some Australians will end up getting a one- or two-year tax cut, but most will not. In fact, due to further bracket creep, increased tax compliance measures and more new fees and charges, we will be all paying more tax in the future.

And how do we know this? Just look at the government’s own revenue projections. Even with the proposed ‘tax cuts’ for next year income tax receipts are expected to increase by 6 per cent in 2018/19 and another 5 per cent in 2019/20 which is a growth rate well above the expected inflation rate of around 2.5 per cent.

It gets worse when you understand that total federal government revenues are expected to rise from $445 billion in 2017/18 to $553 billion in 2021/22. This $109 billion tax increase represents an increase in taxes of around 5.6 per cent a year.

Politicians have an almost Wildean love of spouting oxymorons, and the one they all agree with is the belief they can resist anything, except temptation. The temptation to lighten the wallets of taxpayers to help fund their re-election campaigns is too great for any sane politician to provide an actual tax cut.

So until we find a solution to the problem of personal interest trumping the public good, we’ll just have to get used to ‘tax cut’ being a contradiction in terms.

Matthew O’Donnell is Senior Research Fellow with the Centre for Independent Studies.

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