Per Capita has released its 2014 Tax Survey, which revealed “a marked turnaround in Australians’ attitudes to public spending and tax over the last 18 months”.
Specifically, after a steady rise in the proportion of Australians who perceived they paid too much tax between 2010 and late 2012, most now believe they are paying about the right amount (see next chart).
Further, most people no longer view Australia as a high taxing country (see next chart).
Support for public spending has also risen, with an increasing proportion of people happy to pay more tax in exchange for spending on health, education, infrastructure and to support the economy (see next chart).
Moreover, most believe that spending increases should be paid for with higher taxes on top income earners:
As well as the removal of tax concessions on superannuation and housing:
When asked how governments should fund increased spending on services, 46% of respondents said that this should be done by raising tax on the top 5% of income earners. The second most popular response, with 23%, was the removal of tax concessions on superannuation and housing which also flow primarily to high income earners.
The Survey is a kick in the guts to the Abbott Government’s stance that Australian public spending (and taxes) are too high, as well as its assault on welfare.
As noted previously, I also do not believe that Australia’s tax take is too high. Tax revenue is required to fund the public services that the community both expects and needs. And I personally wouldn’t care if taxes were increased a little if it meant important social programs remained (or were expanded), along with the provision of well-targeted infrastructure.
Of primary importance is ensuring that the tax base is broadened and based on more efficient and equitable sources. This requires a shift in sources from productive effort (e.g labour) towards taxes on land, resources, and consumption, along with adequate compensation for the poor (in the case of raising/broadening the GST). It also requires the closure of egregious tax lurks that distort the economy and/or overly benefit the wealthy, such as negative gearing, capital gains tax discounts, superannuation concessions, and tax breaks on company cars.
An adequate tax take is a vital element for a civilised society. If the Abbott Government was wise, it would place fundamental tax reform on the table and look to wind-back Australia’s world-beating and poorly targeted tax expenditures.
