Ian McAuley | New Matilda, 4 December 2012

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The economic policy Abbott can’t grasp

CPD Fellow ponders what credible policies might look like for the Liberal Party

Eliminating the carbon tax, (Abbott) claims, will save the budget $4 billion and eliminating the mining tax will save another $6 billion… Can elimination of taxes really improve the budgetary position? To get an insight we need to go to the history of a discredited theory called “supply side economics”. Arthur Laffer, an adviser to Ronald Reagan, suggested that a tax cut would stimulate the economy to the extent that tax collection actually rises. Laffer was wrong. Tax revenue fell and America’s public debt trebled on Reagan’s watch.

 

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