I don’t mean to be pedantic – well I guess I do mean to be pedantic – but the problem with bracket creep has nothing to do with whether the economy will recover. The increases in personal taxes are the necessary requirement to pay for all of the expenditures loaded on the economy by Labor. As the story says, Employees lose $25bn to creep as Labor blamed for blocking savings. Everyone will have to chip in to pay for Labor’s waste, and so, those annual personal tax cuts that Peter Costello used to deliver, are for the future. But here is where I wish to differ:
Treasury secretary John Fraser warned last night that fiscal drag was “a worry” that needed to be addressed and higher taxes would hurt growth.
The one thing that won’t be hurt by a gently rising personal tax burden is growth. The pervasive Keynesian mindset where the economy is looked at from the demand side, and that it is consumer demand that drives 60% of the economy, and et cetera, is just plain wrong. Just keep reducing public service waste, get that budget back into surplus, do everything you can to make the private sector grow, and it will all take care of itself. And under no circumstances let “aggregate demand” enter into any part of the policy matrix. It is value