Tuesday, 14 April 2015

Sinclair Davidson is at it again.

I came  to this via Steve from Brisbane,   Sinclair Davidson is again trying to show Revenue is strong for the Government.

One never looks at revenue from a nominal point of view. It always rises unless there is a long period of deflation.
You have to look at revenue as a percentage of GDP otherwise you have no understanding of how strong or weak it is.

We see from MYEFO  that tax as a % of GDP was 23.7% in the last financial year of the 'Howard' government.

Once the GFC hit Australia tax as a % of GDP has been:

  • 22.1%
  • 20.7%
  • 20.5%
  • 21.3%
  • 22.2%
  • 22.2%
  • 22.5% (Hockey)
For a person to say revenue hasn't been the problem they are either a complete idiot or a transparent liar.

Update.

The GFC hit the world in September 2008 via Lehman Bros. Before that we simply had a credit crunch which the RBA for one thought so much of they raised rates to combat increasing inflation.

Further Update.

A person e-mailed me to say I forgot to include the whys and wherefores of the structural budget deficit. 

The PBO said this "…trends in the SBB estimates can be explained by changes in the structural levels of government receipts and payments. From the SBB peak in 2002-03 to its trough in 2011-12, the structural level of receipts excluding GST fell by around 5 percentage points of GDP. The structural level of government payments excluding GST over this period rose by around 1 percentage point of GDP and hence the SBB fell into deficit. Over the period 2011-12 to 2016-17 the structural level of receipts is expected to increase by approximately 1¾ percentage points of GDP while the structural level of payments is expected to decline by around 1 percentage point of GDP leading to the expected reduction in the structural deficit over the period of the 2013-14 budget and forward estimates years. 
Over two thirds of the 5 percentage points of GDP decline in structural receipts over the period 2002-03 to 2011-12 was due to the cumulative effect of the successive personal income tax cuts granted between 2003-04 and 2008-09. A further quarter was the result of a decline in excise and customs duties as a proportion of GDP. Significant factors driving this trend included the abolition of petroleum fuels excise indexation in the 2001-02 Budget and the decline in the consumption of cigarettes and tobacco over the period."
Something that  Judith Sloan has obviously never read or could understand.
So spending is not the cause of the structural budget deficit and tax revenues are clearly down from Howard's era.
So the Catallaxy clowns fully supported policies that led to the structural  deficit and then they complain about it when it eventuates.
Amazing quite amazing. no wonder they do not comment at other blogs.