|Spending political capital wisely|
Johnny (I-want-to-be-remembered-as-the-good-guy) Howard has hinted at tax
cuts. He says the budget is in surplus, and in such cases it is appropriate to
give the money back in the form of tax cuts.
This appears to contradict many predictions about governments and taxes,
particularly those who think that a social democratic government will always
result in taxing at the Laffer curve level.
Given the choice, governments will always
choose to maximum taxation revenue, because the votes they can buy from
pork-barreling are more than the votes they will lose through raising the
So what is going on here? Is this another Keatingesque 'L-A-W law tax cut'?
Another Howardesque 'non-core' election promise? No. This is actually quite
genuine. How can we tell? By looking at the man with the long knife ready to
stick in Johnny's back - Peter (Smirky) Costello.
Peter is being very cautious, and saying that we should only be talking
tax-cuts once the drought relief and war efforts are taken into account. That
is - why give a tax cut when there are more pork barrels to fill?
The reason for this difference in approach is two-fold.
Firstly, John Howard does not intend to retire before the next election -
because he believes he has won it already. His position on border protection
just before the war on terror began, and the fact that the ALP are still
bickering over the issue, really mean they are in without a chance.
Given that Howard has won the next election, he is planning his victory
lap. What would he like to be remembered for - increasing tax revenue in every
one of his four terms, or doing what the Liberal party proclaim to believe in -
reducing the size of government and reducing spending? Johnny wants to be
remembered as the good guy; everyone's mate; the PM who not only kept the Islamic hordes at bay, but also
gave us some tax cuts to repair the picket fence.
Costello however is still lean and hungry. He is unpopular, and knows it.
He knows he will have work hard to win an election if he ever gets to become
leader, and he is desperate for the extra taxes to buy the votes.
The other reason is more conventional. Howard's position will simply make
Peter (can-you-say-overspending) Costello even more unpopular with
voters. Costello has been outwitted yet again by a smarter and more experienced
opponent. His long knife will have to stay in its sheath for a while longer.