Election 2016: Tax policies of the major parties - Part 1
1 July 2016, by Miranda Stewart, David Ingles, Steve Thomas and Shuchita Pota
This Election Brief summarises the key tax policies, costings and revenue estimates of the incumbent Liberal-National Coalition (LNP) Government, the Australian Labor Party (ALP), and the Australian Greens, announced before or during the election campaign. We benchmark the tax policies against the original aspirations of the Henry Tax Review and against the fiscal challenges identified in the Pre-Election Fiscal Outlook Statement issued jointly by the Secretaries of Treasury and Finance (PEFO). These parties’ policies have been presented because they are the ones which are most likely to form a government, or to have an influence on government policy, after the election. They are also the parties with the most comprehensive tax policies to compare.
The 2016 federal election has sometimes seemed to be all about tax, while at other times, tax policies have disappeared from the radar. Neither the Treasurer (LNP) nor Shadow Treasurer (ALP) has been willing to commit to big picture tax reform after the election and they are not seeking a mandate based on achieving “tax reform”. This is in spite of the Re:Think Better Tax process initiated by the Abbott-Hockey government, or the Henry Tax Review initiated by the previous Rudd-Swan Labor government. Yet, the election and the budget before it include a number of fairly significant tax policies.
Fiscal sustainability and budget repair
Tax policies must be considered in the context of the fiscal deficit Australia has had since the Global Financial Crisis, now in its eighth year. The PEFO Statement required by the Charter of Budget Honesty, estimates a peak in the deficit of $37.1 billion (2.2% of GDP) for the 2016-17 year. This is forecast to improve to a deficit of $5.9 billion (0.3% of GDP) in 2019-20 and small surpluses after that.
The LNP’s updated costings plan of 28 June and the ALP’s Fiscal Plan of 26 June illustrate the different weights the two major parties have put on reducing the deficit. There has been some discussion about this during the last week of the election campaign.
Read the full article at Austaxpolicy blog.