Matt Johnston: Pallas conjures surplus but taxes here to stay
A multibillion-dollar rabbit has been pulled out of Victorian Treasurer Tim Pallas’ hat, but could a taxathon hurt state Labor?
Opinion
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For all the talk of a “tough” state Budget, Treasurer Tim Pallas has managed to pull an $11.3 billion rabbit out of his hat.
That’s the combined surpluses he is expecting over the next four years.
Of course, most of that will be eaten up in the back end of the cycle once the government sets some new spending priorities.
And no doubt the Budget will include new borrowings as the government uses low-interest rates to build, build, build.
Pallas said in November — days before voters were going to the polls — that he was willing to increase debt as a proportion of gross state product to 12 per cent.
He’s also introduced a suite of new or increased taxes that will reap $700 million over four years.
Tax and spend agendas may have been controversial at the federal election, and many believe Labor’s negative gearing and franking credits policies spooked voters.
Clearly, that is less of a concern for state Labor.
The people it is aimed at — foreigners, gold miners, people with split titles for a tennis court and motorists buying $100,000-plus cars — probably won’t complain too loudly.
And while Daniel Andrews is backing measures to tax the rich, he is likely to keep the rhetoric around these measures to a minimum.
Instead, he will focus on projects creating well-paid jobs, while maintaining solid spending on education and health.
Opposition Leader Michael O’Brien has been quick to seize on Labor’s taxathon.
“New taxes on homes. New taxes on land. New taxes on cars. New taxes on mining. New taxes on business,” he said.
Mr O’Brien said “Labor can’t manage money” so they “always come after yours”.
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This would have been a much more effective line if Bill Shorten had won the federal election. Mr Shorten’s loss also means there’s likely to remain a lazy tax system in Victoria for years to come, with its reliance on housing transactions.
Who would want to take a political risk by offering serious tax reform?
One thing’s for sure, all the new fees and charges introduced today because of a short-term hit to stamp duty won’t be reversed once the market picks up.
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