Government and Opposition tax policies balanced

Overall, the changes to the structure of taxation under the present government have been for the worse. The prospects for the immediate future do not look promising. The government has promised to focus on the needs of its supporters earning more than $60000 a year, while Labor is still focusing on milking any residual benefits from resentment of the GST.

The Big Question, however, is not whether we should raise one tax and lower another, but how much of our national income we should spend collectively through the tax system. For many years this question has been dodged.

Although neither party has been exactly forthright, voters will be faced with a reasonably clear choice of directions in the coming elections. John Howard has asserted that health, education and other services are adequately funded and that, if they are not, this is a problem for the states. Any further surpluses will therefore be devoted to tax cuts.

Kim Beazley while promising not to raise taxes, has also indicated that, apart from some minor adjustments to the GST, he will not be in a hurry to cut them, spending any available funds on improved services. As the operation of bracket creep tends to slowly increase the ratio of tax revenue to GDP, this approach will allow for modest increases in the share of national income allocated to health, education and other services.

The evidence to support the proposition that we need to spend more on health and education is strong. But this is ultimately a choice that we must make as citizens, and we will get our chance soon enough.