While Coalition attempts to invoke the Soviet Union and the Cuban revolution to attack Labor policies may be shrill, it betrays a key element of their political strategy: tie Labor to tax.



It has been an article of political faith for generations based on the principles that underpin Australia’s two major parties – to promote the collective Labor taxes and spends, the Coalition shrinks government in the name of free markets and the individual. While the parties’ economic policies have largely aligned since the Hawke-Keating reforms in the 1980s, the stereotypes persist.

Tax panics have been a tried and true way of cleaving Labor values from its voting base: as an individual Labor is taking money from your pocket, whereas the Coalition will always put something back.

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But this time around things are a little different because Labor is not actually talking about raising taxes at all. Rather opposition leader Bill Shorten’s assault on what he calls the “two-class tax system” has been quietly gaining traction for some months as the centrepiece of a set of measures to address inequality.

Building on the proposals to limit the advantages property investors have over home buyers and limits to superannuation tax concessions that have since become law, the Labor leader has announced plans to end income tax splitting for family tax trusts and cap deductions for tax advisers.

These sit alongside a broad range of measures to limit multinational tax evasion released before the last election and still on the ALP books, such as a worldwide gearing ratio and increased reporting requirements for local companies.

The point is that none of these policies – not the decision to impose the Medicare rebate increase to fund the NDIS for those earning under $87,000; nor the decision to continue the deficit levy for high-income earners, or even the decision to block the company tax cut for big business – actually represents a tax increase on working Australians.

While the finance minister, Mathias Cormann, can contort the breadth of Labor policy into a $150bn tax grab, the reality is that none of it is being grabbed – rather the Labor party is tightening the loopholes that allow some classes of Australians to minimise their payments.

And Labor is tilling fertile ground. As this week’s Essential Report shows, people don’t actually think the tax system is operating fairly right now.

Just 4% of Australians see the system operating fairly, with only a majority of Coalition voters thinking it is, on balance, operating reasonably. Critically, the “other” voters supporting independents and parties like One Nation that tend to back it, are just as likely as Green voters to believe something is rotten.

So Labor’s proposed intervention in the tax system is not coming from thin air, it is in line with the mood of an electorate which wonders whether the system is operating for them any more.

There are caveats though. Inequality is a frame that is not without its risks for progressive parties seeking to do something about it.

When they are not accusing Labor of being closet Marxists, the conservatives dismiss this as the “politics of envy” and here they have it half right. I have observed time and again in focus group when talking about the tax minimisation practices of the very wealthy, how people shift their attention to welfare cheats.

This “downwards envy” has definitely been a thing in Australian politics; the lifestyles of the rich and powerful are so outside the comprehension of the ordinary Australian they just can’t engage. That, or they just think the wealthy tax minimiser will be them one day.

In contrast the cliches of welfare mum being paid to have multiple babies or the slacker dole bludgers on drugs are stories that simply seem to make sense. That’s why you can see the Coalition desperately trying to shift the debate downwards with the drug welfare crackdown at present, not to mention the attempts this week to whip up tabloid rage over welfare for refugees.

But the other telling thing about this week’s results is that the “downward envy” does not seem to be biting at the moment.

What’s bothering voters is not tax profligacy of the poor, but the behaviour of corporations and the wealthy. It’s not even that they feel they are carrying a particularly high tax burden themselves. It’s just that there seems to be a tax party they have not been invited to.

A breakdown on voting intention reinforces the extent to which this can wedge the Coalition, with a majority of their voters bothered a lot by the rorts, and even more of the unattached rightwing voters.

So what has changed this time?

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With real wage increases at an all-time low maybe people aren’t putting themselves so readily in the shoes of the well-heeled tax minimiser.

Perhaps it’s also an awareness that the billions in unpaid taxes are undermining the ability of a nation with Australia’s wealth to properly fund its schools and health systems.

Or maybe it’s just that people are ready for a party prepared to disrupt a system that allows those who can afford it to buy their way out of their obligations.

Attitudes to taxation have always been about more than government revenue raising – it is about the way we contribute to the nation. When taxes go up, we want to know what we are paying for; when times are good we expect to get something back. But when we don’t think there’s an even contribution then we do expect government to protect the integrity of the system.