Magic money tree

Every election, politicians visit towns with promises of funding for roads, hospitals, and other projects. They make it seem like they’re giving out generous gifts. However, this is far from the truth.

The Reality of Government Spending

The money the government spends comes from you, the taxpayer. Through income tax, GST, and other taxes, Australians contribute significant amounts of money each year. When the government allocates funds for a project, it’s simply redistributing the money that taxpayers have already paid.

Federal government do not shake a magic money tree with cash that has come from elsewhere.

The Political Trick

Politicians often present expected revenue or allocations as new gifts, creating a misleading impression of generosity. They use election campaigns to make grand promises without providing transparent budgeting or genuine costings.

Tasmania‘s GST Revenue

Under Australia‘s horizontal fiscal equalisation system, Tasmania receives more GST revenue per capita than it collects. This is to ensure that Tasmania can provide similar public services as other states, despite having a smaller tax base and higher delivery costs.

That’s the good news.

The Hidden Taxes

While governments may talk about tax cuts, they rarely mention the hidden taxes that increase over time. Bracket creep occurs when wages increase with inflation, but tax brackets don’t adjust accordingly, resulting in higher taxes for individuals. GST creep occurs when prices increase, resulting in higher GST revenue for the government. Have prices increased recently? Of course they have!

That’s the bad news.

The Election Smokescreen

Election campaigns are filled with slogans and promises, but they often lack substance. Politicians may promise to cut waste, lower taxes, and invest in the future, but these promises are often contradictory and unrealistic.

You either [a] spend less and deliver less, or [b] keep delivering and pay for it, through taxes, debt, or cuts elsewhere.

The “cutting waste” pitch is a political Dogecoin, fun to say, but no real value underneath. This talk is often code for cutting services people rely on.

The Need for Honesty and Transparency

Voters deserve honesty and transparency from their elected officials. They need to know where the money is coming from, what trade-offs are being made, and what will happen after the election is over.

An election should be that forum, but it rarely is.