Taxpayers want their money back

This morning’s Age has the first of the Budget polls on what the government should do with one river that certainly isn’t drying up – the river of taxpayers’ cash flowing into Treasury. For some reason, unlike previous years, they have not asked about a choice between more services or less tax, but simply asked ‘Do you support or oppose cuts to income tax as part of this year’s federal budget?’

Two-thirds of the poll’s respondents think that income tax cuts should be part of this year’s Budget, and a little under a quarter oppose cuts. Taken in isolation from the missing services alternative, that roughly transposes the figures from last year, in which 29% wanted tax cuts and 68% more spending on services and infrastructure.

Though it would be interesting to see a repeat of the tax cuts versus services question, the insertion of the phrase ‘as part of’ into the question does highlight that the question in earlier years at least partly created a trade-off that did not need to be made – the government could (and did) cut tax rates while also increasing spending. Indeed, as the tax revenue statistics released earlier in the month showed despite the cuts to tax rates for 2005-6 tax revenues increased by more than 5% per person on the previous year.

Perhaps also voters are wising up to the realistic alternatives available. If we don’t get tax cuts, where will the money go? As the AFR reports this morning, the government is sitting on more than $2 billion in discretionary programs even before it dips into the surplus to finance its election promises. If you don’t live in a marginal seat, you’d be mad to prefer this pork barrelling to tax cuts. Or if the money isn’t being spent on marginal seats, it will be stashed away in the Future Fund to provide a comfortable retirement for public servants. Again, I can’t think of a strong reason to prefer that to tax cuts now. I’m in the 24% of voters who ‘strongly support’ tax cuts.