The economic policy Abbott can’t grasp

Photo of Tony Abbott, from New Matilda, December 2012

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.