Many organisations on the centre-right have expressed strong opposition to the idea of a deficit reduction levy that has been floated as part of the pre-federal budget softening up period.
The opposition has been motivated by sound principles: the way to reduce the deficit is to reduce the size of government by cutting spending, especially when the Abbott government went to the federal election promising 'no new taxes.'
It is therefore easy to understand the exasperation with the thought of yet another impost on the 'rich' on top of the already substantial tax burdens imposed on individuals and corporations.
Unfortunately, the Prime Minister also promised no cuts to health, education and pensions. The fiscal position, however, means that budget repair cannot occur without breaking these election pledges.
The government clearly understands that they face a political, not just a budgetary challenge, and it seems to think that, realistically, the 'pain' will need to be shared on both the tax and spending side.
The government has risked alienating all those who support the no tax position. The only way it can recover its standing is to prove that it is not just another higher tax and spending outfit.
If the government is able to say that it is taking a balanced approach on both the expenditure and revenue sides of the budget, it may be likely to be more inclined to act on some of the more difficult spending cuts recommended by the Commission of Audit's report.
Let's hope the government can clearly distinguish the difference between tactics and strategy. A temporary tax rise in the form of a deficit levy could be a useful tactical ploy that advances the overall strategic objective of substantial cuts to spending and reigning in national debt.
Genuine budget repair will be the ultimate test of the government's political strategy. A pass mark for the Abbott government will depend on whether Joe Hockey's first budget cuts as deep and hard as the first Costello budget in 1996.
Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > Burned by the deficit levy to save the debt village
Burned by the deficit levy to save the debt village
The opposition has been motivated by sound principles: the way to reduce the deficit is to reduce the size of government by cutting spending, especially when the Abbott government went to the federal election promising 'no new taxes.'
It is therefore easy to understand the exasperation with the thought of yet another impost on the 'rich' on top of the already substantial tax burdens imposed on individuals and corporations.
Unfortunately, the Prime Minister also promised no cuts to health, education and pensions. The fiscal position, however, means that budget repair cannot occur without breaking these election pledges.
The government clearly understands that they face a political, not just a budgetary challenge, and it seems to think that, realistically, the 'pain' will need to be shared on both the tax and spending side.
The government has risked alienating all those who support the no tax position. The only way it can recover its standing is to prove that it is not just another higher tax and spending outfit.
If the government is able to say that it is taking a balanced approach on both the expenditure and revenue sides of the budget, it may be likely to be more inclined to act on some of the more difficult spending cuts recommended by the Commission of Audit's report.
Let's hope the government can clearly distinguish the difference between tactics and strategy. A temporary tax rise in the form of a deficit levy could be a useful tactical ploy that advances the overall strategic objective of substantial cuts to spending and reigning in national debt.
Genuine budget repair will be the ultimate test of the government's political strategy. A pass mark for the Abbott government will depend on whether Joe Hockey's first budget cuts as deep and hard as the first Costello budget in 1996.
Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.
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