In an attempt to slap down Peter Dutton’s leadership run, Treasurer Scott Morrison described Dutton’s plan to exempt power bills from the GST as a “budget blower”.
This proposed policy is estimated to cost $7.5 billion over 4 years. Let’s just assume that this figure is correct.
Over the same 4 year period, total GST revenues would be, perhaps, $1.3 trillion. So a $7.5 billion reduction would represent a 0.57% reduction. Not exactly a terminal hit. (NB In earlier version, Spartacus made an arithmetic error. Corrected now).
But more to the point, the default response from Treasurer Morrison to a loss of revenue is not to consider where spending reductions could be found, but rather to suggest that the revenue would need to be found elsewhere.
With regard to Dutton’s proposal, Spartacus is torn. Another distortion in the tax system is bad. But a tax reduction, any tax reduction is good.
The real problem is that Treasurer Morrison seems unable to countenance any reductions to the size of the government. Every “tax cut” he is proposed thus far has not been from reduced government expenditure but rather from increase taxation elsewhere (including through bracket creep).
So much for a party of low taxes and small government. Treasurer Morrison. Where the bloody hell is your spine?