There is increasing evidence that the existing tax system will...

There is increasing evidence that the existing tax system will be unable to bear the cost of Labor's spending commitments without taking measures that would require future governments to raise some $120 billion ? the equivalent of $5,000 per person ? in additional revenues by the end of the decade, according to The Australian Financial Review.

The newspaper pointed to the National Disability Insurance Scheme ? estimated to need an extra $10.5 billion annually within six years and nearly $50 billion in total by the end of the decade? the $4 billion dental care system announced Wednesday and the $5 billion annually for education recommended by the Gonski schools review.

“The politicians just don't get it,” said Deloitte Access Economics partner Chris Richardson, according to the AFR. “Both sides are operating on a rule of thumb that worked for a decade, which is that China paid for all sorts of things, and that's just not true any more. There's a good case for much of this spending, but our budget doesn't add up any more.”

Already, Labor's pledge of a $1.5 billion surplus in the current financial year has been called into question, and was cast into further doubt this week when Treasurer Wayne Swan admitted that iron prices have fallen below the level forecast by Treasury.

The AFR cited modelling firm Macroeconomics as warning that without spending cuts, the 2012-13 budget would be in deficit by as much as $15 billion.

“This stuff goes out much further,” Business Council of Australia chief economist Peter Crone said, according to the AFR. “The Americans publish medium-term fiscal projections, so let's, in the interests of transparency, put some of this stuff out there. We have no idea what the budget position looks like in the out years.”

http://www.businessspectator.com.au/bs.nsf/Article/Labor-questioned-on-how-to-fund-spending-promises-pd20120829-XMPJL?OpenDocument&src=hp2