Public divided on tax and spend

The first of the Budget tax and spend polls have been released, but it is hard to get a clear reading on whether the long-term trend towards support for more taxing and spending is easing or reversing.

In a Newspoll published in The Australian, the public is almost equally divided between saying scheduled tax cuts should go ahead (44%) or cancelled to reduce the deficit (47%). The 44% saying go ahead is slightly below the 49% who nearly 12 months ago wanted last year’s tax cuts to go ahead, but the trade-off posed has changed completely: last year the stated risk was higher inflation and interest rates (it seems so long ago…), this year the risk is making the budget deficit even larger. In both cases, however, just under half wanted tax cuts despite a risk of negative consequences later on.

As reported at Pollytics blog, the Essential Report survey found that, when given a choice between reducing the deficit and increasing taxes on high income earners and decreasing spending, 49% went for higher taxes and 42% for less spending.

If we assume that higher taxes and cancelling tax cuts are much the same thing, it seems like pro-tax views are still favoured by more people than the lower-tax perspective. However, the role of deficits in structuring opinion makes it hard to see where the underlying trend is going; it is possible that the deficit may induce support for tax that would not be there in better fiscal circumstances, just at it was possible that the previous large surpluses induced support for more spending that would not have been there if higher taxes were needed to pay for it.