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Labor stands for higher taxes.

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Thu, 29th January 2009

LABOR STANDS FOR HIGHER TAXES The Hon Julie Bishop MP Shadow Treasurer Deputy Leader of the Opposition

This morning Treasurer Swan has admitted what we all knew, that Labor is the party of higher taxes.

This morning Treasurer Swan rejected tax cuts and attacked the Coalition for supporting tax cuts to help families and boost the economy in these tough times.

The Coalition believes that permanent lower taxes for individuals and businesses will bolster growth and private sector job creation.

Lower taxes will be more effective than one-off measures in restoring business confidence and driving investment and job creation.

Economic growth comes from increased productivity and increased investment. Lower taxes promote growth by providing incentives to work, invest and stimulate the economy.

This morning the Treasurer claimed on Radio National that ‘the IMF rejects tax cuts’. Treasure Swan is wrong.

‘revenue-based stimulus measures seem to be more effective in boosting real GDP than expenditure-based measures, particularly in the medium term and in advanced economies’

IMF World Economic Outlook, October 2008, p.178

Recent IMF reports and comments including those of John Lipsky, First Deputy Managing Director of the IMF also confirm that permanent measures are more effective than one off measures.

‘Temporary sources of income tend to be saved, while increases in longer-term income are more likely to be spent’

John Lipsky - IMF's First Deputy Managing Director, The Australian, 23/01/09

These comments are supported by leading American economist, John B. Taylor, who has shown that one off payments or temporary tax rebates do not stimulate household consumption or aggregate demand in the economy. His advice, and the advice of many other economists, is to bring in permanent tax cuts as a way of stimulating economic growth.

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