The Canberra Liberals are hoping to win the upcoming election on a promise of lower rates. If you vote Liberal, the ads blare, your rates will be lower. But what is not clear is whether they plan to collect less tax overall. The ads are strangely silent on this issue but the simple fact is that if they collect less revenue they are going to spend a lot less money on health, education and transport. One of the few things that economists can agree on is that there are no free lunches. If you want to live in a community with very low rates of tax then you will have to live in a community that doesn’t spend much on health, education or transport. Alternatively, if you want to have more of those services, then someone is going to have to pay for them.
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