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Friday, April 15, 2016


Without taxation, life would be less liveable


Chris Middendorp

It was that protean genius Albert Einstein who said that the hardest thing in the world to understand is income tax. We can only speculate that with the great man cogitating on whether or not God was playing dice with the universe, he was too preoccupied to see how the revenue collected by government actually made life here on earth bearable.
If you bother to reflect on the role that taxation plays in a democratic state, it's almost impossible not to conclude that it is what makes a civil society achievable. Not just by funding a police force, a fire brigade or a defence force. Not just by paying for roads, public transport, gardens and parks. Not just by building hospitals, libraries, schools and sewerage systems. But by funding practically everything that makes it possible for human beings to flourish.
All this raises the question: why is the paying of income tax so reviled? How is it that elections are often won or lost over such a beneficial concept? Taxation is a synonym for an unpleasant obligation.
Many on the political right would go even further and view taxation as virtual government theft of an individual's hard-earned cash. The truth about taxation is rarely stated. It is a privilege and nothing less than our opportunity to make a positive contribution to the wellbeing of our nation.
Nevertheless, the politician who does not comprehend the public's general antipathy towards taxation is doomed. In 1993, when Liberal opposition leader John Hewson was unable to explain his new tax ideas during a TV interview, he generated widespread fear and lost the "unlosable" election. In the US, when George Bush snr failed to deliver on his triumphant neo-liberal promise "read my lips, no new taxes", he condemned himself to being a one-term president.
In recent times, the Liberal leader, Tony Abbott, has achieved some traction by evoking the great taxation demon. In seeking to discredit Labor's climate change initiatives, Abbott endlessly repeated the childish mantra that the policies were nothing but a "great big new tax". He knows that pandering to our fear of taxes is a better strategy than actually engaging in a debate about policy content.
Our fear and loathing of taxation has generated a vigorous culture of tax evasion in Australia. Through trust rorts alone, it is estimated that our community is robbed of about $1 billion a year by companies and wealthy people who conceal their true taxable income.
I'm advised by senior academics who specialise in taxation that there have been few, if any, studies into the full extent of tax evasion in Australia. In an era when research is conducted into navel lint, this omission seems staggering.
It is telling that the Australian Taxation Office is spending more than $774 million over four years to help identify what it calls "gaps in compliance".
Its goal is to energetically prosecute those who would avoid their tax responsibilities, thereby raising an astonishing $6 billion. What unfathomable amount, you wonder, will still slip through the Tax Office's lavishly funded dragnet?
In the meantime, we can read almost daily in the media how there isn't enough revenue to fund vital community programs. Treasury figures estimate that in four decades Australia will require $40 billion more in revenue just to fund age pensions and maintain aged care services.
The recently completed and much awaited report into tax by Ken Henry will be giving Treasurer Wayne Swan a lot to think about and will hopefully generate fresh strategies to capture the significantly increased revenue we require.
You will often hear conservatives posit how Australia is a high-taxing nation, but the truth is we are among the lowest taxers of the OECD nations. There are countries such as Sweden, for instance, that understand that a full public purse equates to a higher quality of life.
While it is true that there are many possible debates about how a tax system should be structured in terms of efficiency and fairness, what isn't debatable is that tax evasion is stealing from the community.
Many of us are clearly infuriated by the thought that people we know might be shirking their fiscal responsibilities, and this is reflected in the year's 56,000 phone tip-offs to the tax evasion report line.
Contrast this with the National Security Hotline, where reports of suspicious behaviour and potential terrorism are made. Even during the paranoid days of 2005, following the second Bali bombing and the London attacks, it only managed to peak at about 30,000 calls.
When politicians promise tax cuts we should be suspicious, not euphoric. A promise like that should make us contemplate what the community will be going without. By not paying tax, we will all pay in the end.
Australia faces some significant hardships ahead. Depleted resources for childcare, aged care, mental health support, housing, schools and hospitals are not just boring statistics. These inadequacies will destroy lives.
It is clear that we need to improve the efficiency of our tax system if we are going to continue to cherish the proposition that Australia is the lucky country. We need to grow up and acknowledge that paying income tax is not a burden; it ought to be our proud contribution.
Chris Middendorp is a community worker and writer.