Labor’s capitulation on tax policy may help them regain government, but what then?
That’s the headline and standfirst for my latest piece in Inside Story. Key paras
What can be said with more certainty is that, even if Labor wins the 2022 election, its capitulation on tax policy will make holding office for more than one term very difficult. The concession on negative gearing, while regrettable, was mainly symbolic. The lost revenue could be made up in other ways, or else with tolerance of a modestly higher budget deficit.
But the tax cuts are big. They will cost the budget around $15 billion in their first year of operation and the cost will rise steadily after that. That’s more than the entire annual value of the spending commitments Labor took to the 2019 election, which would have reached $11 billion in 2022–23, according to the Parliamentary Budget Office.
In other words, to offset this concession, Labor would need to abandon its entire program, and then find even more savings.