It’s a little unfashionable to come out in favour of taxation these days.

If you read the debate about our tax system, you’d think the only issue is about how quickly we can cut taxes and get this thing called government off our backs.
The debate about tax has been skewed towards the views of business, and a view that the national wellbeing is nothing more than the sum of corporate balance sheets. A view that if it’s possible for a small percentage of the population to earn big salaries, then everyone else must be doing okay.
The Federal Government is holding a tax forum on October, in which all sections of the community including the union movement have been invited to participate.
Making sure we hear a range of opinions about tax is important. So is remembering that taxation serves a purpose – providing the things we value as a nation and as a community.
We’ve seen, with the Resources Super Profits Tax, how a few huge multinational companies were able to exert undue influence through misleading advertising campaigns. The result being that a sensible tax reform, (which incidentally would have funded tax cuts for other businesses) has been modified with less benefit for the rest of society.
This tax forum must not be dominated by calls for corporate tax cuts and the unquestioned assumption that cuts to business taxes will benefit our society in the long-term.
Of course we need to encourage people to work and retain a fair share of what they earn. But we also need to recognise that there are some areas where the government can not contract out its responsibilities to the private sector, and that taxation is necessary to pay for these areas.
American judge Oliver Wendell Holmes once said he liked paying taxes, because with them he bought civilisation. Most people would not be quite so keen about the money they pay governments, but it’s worth thinking about what we get in return.
Taxes are about ensuring we all benefit from the wealth our country generates, by redistributing part of the huge profits made by billionaires and big corporations to services we can all use and depend on, and also by ensuring lower income people access decent jobs.
Schools, hospitals, roads, public transport, a defence force, emergency services, pensions if you need them. The knowledge that the food we eat, products we buy and buildings we work in are safe. These things have all been built up by generations of Australians. I do not want to be part of a generation that let them go because we wanted short-term tax cuts.
One of the myths about taxation in Australia is that we are a highly-taxed country, or that taxes are increasing.
OECD figures show that compared to similar economies, we have a low rate of taxation. In 2008 Australian taxes (across all levels of Government) amounted to 27.1 per cent of GDP, compared with over 40 per cent for Sweden, Norway, Austria and France, all of which have a strong record of economic growth and have avoided the debt problems plaguing Greece.
Even in the USA – usually considered a bastion of low taxes - total taxation is 26.1 per cent of GDP.
Total taxation in Australia has remained roughly at this level since 1985, regardless of which party is in power.
Another myth is that people on wages well over $100,000 are somehow average income earners, who need “tax relief”. The median income of Australian full-time workers is $54,750. This means that half of all full-time workers earn less. Of course that doesn’t take into account people who are in part-time or casual jobs despite wanting to work more.
For many families there are strong disincentives towards moving from welfare payments to any kind of work that can see most of their extra income gone in taxes or childcare costs. A tax/welfare system that discourages people from entering work is one that is not serving Australia in the long-term, because as the population ages we will need every worker we can get.
The raising of the tax free threshold as part of the package of household financial support associated with the price on pollution is a good step towards addressing this issue.
To me, ending this situation is a much bigger issue than whether people earning over $150,000 are wealthy enough to pay the flood levy, yet it does not get the same level of media coverage.
There are a few more topics unions would like to see discussed at the tax summit.
One is how can we use the tax system to encourage housing affordability. Negative gearing offers a tax break to property investors, while pushing up house prices to unaffordable levels. Surely there must be a way to reduce negative gearing, while keeping incentives to create new housing.
Lets have a look at sham contracting. This is the insidious practice where big employers, especially in construction, pretend that their employees are actually independent contractors, avoiding tax.
There is room for improvement in our tax system. Anyone who fills out a tax return or a BAS will realise it could be made a lot simpler. But we need to recognise that the concept of taxation is not a negative one, but the way in which we have built much of the Australia that we benefit from today.
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