It was a promise they made after the spending spree of the past 5 years i.e since labour came back to office in 2007. From a surplus budget left by Peter Costello, it went down last year to negative $44b.
Labour had to deliver on its promises by hook or by crook to get the budget back in surplus although by a minimal 1.5 b. It also had to give away some goodies as the general elections looms and this is exactly what Treasurer Wayne Swan did.
Labour presented a budget which is tailored for the lower and middle class, for the battlers. A budget with cutting income tax is rare. The tax free threshold tripled going for $6,000 to $18,200. This means that people earning less that $18,200 will pay zero tax and if it has been deducted at source, they will get the refund. This represents some 1.5 million taxpayers paying no tax al all.
It also means that all those earning beyond $18,200 will not pay tax on the first $18,500 which was at the rate of 22%. It represents a saving of close to $2,000.
Pensioners will get an increase of $338 and families with school children will get $410 for primary and $820 for secondary students among other benefits.
The budget forecasts a surplus of $1.5 billion coming from a deficit of $44 billion. It means that new revenues and savings will amount to $45.5 billions. While cost cuttings have been a hard thing for labour who always favour big spending and deficit budgets, they have now done it. It affects many government departments and some public servants will face redundancies.
This surplus, according to wayne Swan, will continue to increase over the years. But remember this is only a forecast and will only come to reality or not at May of next year.
Most of the government revenues will come from the Mineral Resources Rental Tax and the new Carbon Tax. They are both taxes on big business. The MRRT is fair when we know that billionaires are getting everyday richer exploiting our land. It takes great courage to tax these powerful people like Clive Palmer, Gina Reinhart and Mr Forrest who are favoured by the Liberals.
The Carbon Tax will be imposed on some 200 businesses who are consistently and continuously polluting our atmosphere. It aims at reducing emission by 5% by 2020. The CT will be changed into an Emission Trading Scheme after some time.
In the budget speech there was hardly any mention of the Carbon Tax. These words are toxic to the government as this is the Black Caviar ( the winning horse) of the opposition. Campaigning against the carbon tax has caused damage to the government. It has become a slogan which hammered by Tony Abbott so much so that the majority of Australians now believe that it is a bad tax, that will affect us all. It comes into effect on 1st July and it is only after a few months, or a year later that we will feel the real effect of this tax, if it will really drag prices up and our standard of living down. It remains to be seen and proved. If it doesn't it will surely backfire on the opposition as this is their only weapon. A weapon that Tony Abbott used extensively in his budget speech reply.
The budget of Wayne Swan was definitely a leftist and an electoralist one. It shows that Labor wants to connect back to its base i.e the lower and middle classes. Will this pay off in the months to come ?
The answer will be in the polls three months before August 2013. But for now, labor is still in deep shit. Their battle is definitely uphill.
GDL
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