John Howard and his Treasurer, Peter Costello, have begun the election campaign with an incredible admission – that bigger isn’t always better when it comes to a surplus.

They’ve announced a plan to restructure the tax system to lower tax rates and raise the tax-free threshold over five years from 2008.

Back in August, you may recall, Galaxy released a poll that found only 32 per cent of voters believe that the forecast $17.3 billion surplus was a product of “good financial management”. Instead, 51 per cent believe the Government has “mainly achieved this surplus through tax rates being too high”.

Back then, the PM’s favourite paper, the Sydney Daily Telegraph, observed:

Not so long ago, the size of the Budget surplus used to be a pretty simple way to determine how well a government was doing… Now, as voters struggle to balance their own budgets amid rising interest rates, soaring rents and skyrocketing supermarket and petrol prices, they increasingly see huge Budget surpluses as a slap in the face… they see it as just one more example of how they’ve been slugged…

Broken down, that $17.3billion surplus is equivalent to a one-off $1572 tax rise on every one of the 11 million taxpayers in this country.

Or, to put it another way, we all paid about $30 a week more than was needed to balance the Budget.

Costello has said the goal of the restructure is to arrive at a tax-free threshold of $20,000 and for there to be only four marginal tax rates, with the top rate set at 40 cents in the dollar.

But is this too late – too blatant an election giveaway? The Government’s largesse back in May failed to produce a “budget bounce” in the polls.

Some economists – like the Centre for Independent Studies’ Peter Saunders – have been calling for something similar for many years.

Taxpayers seem well aware that the Howard Government bribes them with their own money. What do you think?