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The Forum > Article Comments > An Australian tax prospective 2014 > Comments

An Australian tax prospective 2014 : Comments

By Don Nicol, published 10/12/2014

An ordinary bloke's take on the taxation problems facing Australia and while less may equal more.

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The extreme complexity of our system simply assists now endemic avoidance! Meaning a vastly greater load for those who still pay tax!

And a problem further compounded by the destiny of demography, which needs to be faced head on!

The ubiquitous and cascading GST was introduced to make up for successfully avoided corporate tax!
Little wonder some referred to it as the Sheriff of Nottingham's tax.

And we always pay for any increased complexity, with bigger government.

If we could but relieve ourselves of the burden of state governments, we would save the taxpayer around 70 annual billions; and without sacrificing a single service!

Which would cost as much as 30% less, by much more regional autonomy and direct funding.

With one single exception we are the most over governed nation on earth, and are forced to pay through the nose for everything due to that!
Even so, there is a huge infrastructure deficit, that adds exponentially to everyone's costs!

There is only one way to fix this broken system, and that is to throw it out with the other garbage.

Replacing all that convoluted complexity, with a far less costly to all current taxpayers; single stand alone, unavoidable expenditure tax; which could be set at 18% initially, and progressively reduced to just 5%; as the avoiders, [all of them,] were caught once again in the tax net; relieving the common burden on the rest of us!

5% being 2% less than current 7% tax compliance costs, which would then became entirely unnecessary along with other regressive taxes, i.e., fuel excise, payroll tax and the GST, all collected as entirely unessential states taxes/funding paradigms!

I'm tired of this endless debate/obdurate obfuscation, which simply enables the actual avoidance of long overdue reform; the real intent of the article or the author?

Remember, there is a lot of very powerful vested interest in the current status quo; and or, little on no appetite for REAL reform!
Rhrosty.
Posted by Rhrosty, Wednesday, 10 December 2014 3:27:41 PM
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1)Bashing the rich for additional tax drives many of the prosperous and their businesses offshore to a more favorable location, really how many? business doge tax no matter what the level is! Apple anyone?

Why is debt bad, as long as it is manageable and that is very subjective. Nearly all of us have had home loans, car loans, credit cards, loans for holidays and short term loans to get us out of finance stress. why is it bad when government do it?

The reality is Government need to engage the country is a suitable conversation about the services we want government to provide and then work out how much that is going to cost and then tax us accordingly. There will be difference in opinion on what Government should provide...hence political parties. no estimation process is perfect so we either take too much tax (surplus) or don't charge enough(deficit).
Posted by Cobber the hound, Wednesday, 10 December 2014 4:21:10 PM
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Our taxation system should be lined up with reality.
Whitlam introduced the concept of rebates of 30% as against deductions.

So ended the fair and simple principle of paying tax on all income after deduction of all expenses necessary to earn that income.

Deductibility should be extended to be compatible with reality.
e.g. The reasonable cost getting to work, child care, sickness income
insurance and life assurance, medical expenses should all be deductible before reaching the figure ( i.e. taxable income)on which income tax is paid.

No rebates, no child care benefits.

If there is not a reasonable amount left from a salary to pay the real cost of child care then a parent should stay home. The total cost of government subsidies and parent sacrifice in child care fees could well exceed the value of what many mothers produce.

With franking credits,30% company tax is not a problem. Franking credits lead Australians to invest in Australian enterprises.
We have sufficient capital available in our compulsory superannuation funds to finance ourselves. Investment in overseas investments should lose the preferred tax status of a superannuation fund

A fixed percentage of taxable income should be allocated to the ABC so that taxpayers are kept aware of the real cost of the ABC and vote for cuts necessary to keep it in control. Its cost and power are, at present out of control.

A simpler, reality based tax system and doing away with "churn", ( taxing in and doling out)would save billons in public servant salaries and in accountancy fees and administration costs in the massive job of accounting to revenue authorities.

Under the far simpler tax system of the 1950s I did my first tax return as kid of 17 fresh out of school. It took 20 minutes-- no HR Block or ITP or accountant.
The poor battlers who travel 3 hours per day to get to and from work and pay an undeductible $150 per week to get from the outer suburbs are the real "forgotten people".
Posted by Old Man, Wednesday, 10 December 2014 5:26:20 PM
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I can't fault any of that Don, it is all simple logic, particularly to those of us who have always been providing a living to someone unknown to us.

More sense from Old Man too. I too was doing my own tax in the late 50s, early 60s. I had a car allowance, so had to run a depreciation system on my car. I also was buying a home, & the loan interest & hospital & medical benefit contributions were also deductions, but it was still quite simple.

They praise the growth of service industries, & the jobs they provide, but all too many of them are in areas like tax agents, personal trainers & lawn mowing, services we really need like a hole in the head.

I also paid 7.5% tax on my taxable income. If we had a few less government services, [thus a lot less bureaucrats to pay so lower 1950s taxes], & consumed a few less of these new often unnecessary services, we might just be able to live on a single income again.
Posted by Hasbeen, Wednesday, 10 December 2014 8:08:23 PM
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This article is based on many false assumptions.

Although high taxes do drive the prosperous offshore to some extent, it is a VERY SMALL extent, particularly in Australia (as we're so far from everywhere else, so there aren't the opportunities to work here but live abroad that there would be in Europe). Taxes would have to be MUCH higher than they currently are before we'd reach a situation where cutting them increased revenue and raising them decreased it.

'Tis similar with businesses though low taxes can attract them, there are other far more important attraction factors: good infrastructure, low interest rates, and a highly educated and skilled workforce are three examples.

GST is a regressive tax even before you take the small import exemption into account. We're better off getting rid of it and broadening land tax instead (with a temporary increase in income tax to cover the shortfall, as any land tax increase will have to be phased in slowly to avoid unfairly disadvantaging property owners).

You assume that when a government spends money, it's not getting good value for money. There are of course instances where this is true, but it is still incorrect to assume it to be the general case. And your assumption that there will be insufficient funds in future is also dodgy, particularly as such situations tend to occur after tax cuts!

Our children borrowing will put them deeper in debt, but our government borrowing will not. They're not obligated to pay down government debt. But even if they were, many things governments spend money on will benefit future generations so why should the cost be paid up front?

The government only borrows in Australian dollars, so it can't go broke, and the value of our dollar is self correcting. And our superannuation system ensures we're not overreliant on foreign investment. So as long as we don't take that poison pill of yours, we'll be OK.
Posted by Aidan, Wednesday, 10 December 2014 9:43:50 PM
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I'm not an economist but even economists argue amongst themselves about the value of various ways of running an efficient economy, so we will always have "helpful suggestions" from one and all.

I have always been taught that there is good debt and bad debt. Debt is often necessary to create eventual production, but debt purely for consumption is generally not a good idea. It all has to be paid back with interest and the fact that it was handed out to the public for that purpose by the previous government was a waste in my opinion.

I have always saved a proportion of money earned. The only thing I have borrowed money for was for my mortgage, now paid off. I have never used a credit card, built my own house with my own hands, never bought a new car. Still grow some of my own food, now spend only $50 a year on clothes (!) and yet enjoy a satisfying and good standard of living. I know everyone wouldn't want to live the way I do, but sacrifice in early adult life has certainly paid off for me as I have never taken anything from the government in the way of subsidies or the dole, yet now to my great surprise offer me a health care card for free medical treatment and a low income support of $200 a quarter (soon to be abolished I understand)

I find it hard to understand why everyone one wants something for nothing from the government which means out of someone else's pocket.

I understand the acceleration of money in economic theory and I probably don't contribute a great deal to that in the way of consumption, but as far as I'm concerned debt is a big ugly word and should be avoided at all costs. As Dickens said in David Copperfield:-

"If a man had twenty pounds a year income and spent nineteen pounds nineteen shilling and six pence, he would be happy, but if he spent twenty pound and sixpence, he would be miserable.
Posted by snake, Thursday, 11 December 2014 11:52:47 AM
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