Tax cuts for the Liberals

Tuesday, 16 October 2007 

Back in May when the politically astute Treasurer handed down his twelfth budget, he included tax cuts totalling $31.5bn over four years. Commentators saw it as a political triumph and forcing Rudd onto the back foot. Rudd’s response was to run a telly ad on his personal conservative values and talk in Parliament about something to do with putting more lathes in schools. In the end, the polls barely moved.

Part of the reason was hinted at in a Galaxy poll taken in August that showed the economic debate has changed. Over half of voters saw the budget surplus as a result of paying too much taxes while only a third saw it as a result of economic stewardship. The declining credit given to economic stewardship is a sign how the economy has been depoliticised as the major points of economic difference, over union power and government spending, have gone. Whether a budget is in surplus or not has little meaning other than tax revenues are being held back by the government (ironically, this view that tax cuts are really “your money” being given back is normally a favourite argument of conservatives). In fact there is even a negative for the coalition if Rudd’s anti-politics campaign makes surpluses look insensitive against people’s struggle to balance their own budgets.

The Liberal leadership is probably aware that the impact of tax cuts has changed and the latest $34bn announcement may not improve polling, even with its core voters at whom this round is aimed. However, at this early stage of the campaign it is more important to cohere the party and maintain morale than win votes. A tax cut announcement gives the campaign an appearance of normality and highlights what internally Liberals believe is one of the government’s few strong points. Given that the media still generally sees this campaign as a rerun of the past and believe in the hip-pocket fallacy, they will probably help.

Posted by The Piping Shrike on Tuesday, 16 October 2007.

Filed under Tactics

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