Change tax tack to take power back


'Taxtrack' by Chris Johnston features Tony Abbott holding a burst bag of tax dollars, as small stylised citizens wheel portions of the spilled money off to the causes of their choice, for example barrels labelled Environment, Hospitals etc.A person's usual engagement with taxes is that you pay them. You might do this through sales (goods and services) tax, your personal income tax, the capital gains tax, property taxes, or excise taxes. There are others. Most people also experience tax through that happy 'eofys' (end of fiscal year sale) moment when tax returns are usually due. You might even get some money back — more if you don't have a HECS debt. For others, usually the less lucky, there is a third way of engaging taxes. And that's through the audit.

These are the standard ways that citizens engage the public finances of Australia. Money gets paid, some of it might come back, but most of it is held in the treasuries of state and federal governments and then spent. But is this the best or only way that taxation should work?

Enter the TaxTrack idea. I'm currently working on this and first brought it up in my book Evolutionary Basic Democracy. The idea comes in two parts.

The first is that you would be able to log in to a website online and see exactly where every cent of your tax money is currently held. You would be able to see when and where it's spent and, importantly, who spent it (e.g. a ministry, public service office, or member of parliament). You might like to contact someone about this spending and you would be able to have a reliable contact method to reach someone in the right office.

The second part of the idea— and this is where things get saucy — is that you would be able to choose what your tax money will and won't be spent on.

It's not inconceivable that individual citizens be given the chance to fill out a preference form online as part of their own personal, digital tax portal. You could choose to pick 'below the line' and individually choose what your tax money can and can't be spent on. For example, you might like to only spend on funding public schools, the bullet train, hospital supplies and museums. You might choose not to spend on nuclear power plants, weapons development, or the automotive industry subsidy.

If you can't be bothered choosing individual items you can instead tick pre-packaged spending options: a socially-conscious spending option, an environmentally-friendly option, or a security-oriented one. It would be like choosing broadly where you want your superannuation to be invested.

For TaxTrack to work you would need to have every cent of your tax money uniquely serialised according to your tax file number. You might even want to sport around a 'tax card' where you can 'touch on' before making a purchase at the shop to record your GST. Otherwise, if you can be bothered, you would have to hold on to the receipt. And there would also need to be an easy to use, but complicated to make, website.

The tax portal website is intriguing in itself. You could conceivably access recommendations from independent third party specialists if you are unsure what you'd like to fund, or would like to be more informed before deciding. Specialists from economics departments in Australian universities might recommend you spend on economic stimulus in order to avert an economic slowdown in bad global financial times. Or that you should fund research and development in renewable energy technologies to help the economy stay competitive.

TaxTrack raises some problems. Should you, and other citizens, be able to control what your tax money can and can't be spent on? Is TaxTrack really something that can allow you to reengage the public finances of your country? These are conversations I think citizens should be having.

Some people would be nervous about this type of change. Australians might not be able to agree to fund a stimulus package in time to save the economy. Some areas that need public funding might slip because not enough people want to fund them. Some people might start demanding the right to have a say about whether Australia can double its debt-ceiling — it wouldn't be hard to build this type of survey into the tax portal website.

Nonetheless there surely is much to be said for providing individuals with the means to easily see where their money is held and what it's doing, and the right to choose what their tax money can and can't be used for.

Jean-Paul Gagnon headshotDr Jean-Paul Gagnon is a social and political philosopher specialising in democratic theory. He is a university postdoctoral research fellow at Australian Catholic University in Melbourne.

Topic tags: Jean-Paul Gagnon, tax



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Existing comments

Some innovative ideas from Jean-Paul. Although I haven't had any difficult dealings with Tax Office (too small a fry, I think), many people I've met have. Even an online connection may rankle. The big end of town may also have a greater voice under this arrangement? There would certainly need to be provision for those on the margins to contribute ideas.
Pam | 17 November 2013

As a paleocon/Austrian economics fan, I think we're vastly over-taxed, and in general the typical modern nation state much bigger than the optimal size to everyone's detriment especially the poor. Thinking about taxation in the way Jean-Paul suggests might encourage sympathy for this notion, so, way to go, Jean-Paul! Apart from that, I think his is a far more healthy attitude to taxation, than, with respect, some (not all) of the ideas put by Fr Hamilton in his recent piece. Fundraising experts insist that the number one rule is: look after your benefactors. So, inter alia, show them what their donations are doing down to the most concrete level and let them own the process as much as is feasible. This is not out of some Machiavellian plot to suck benefactors in (though it may be misused that way by the unscrupulous, to their ultimate demise): it's following basic principles of human nature - about how people naturally like to see their goals and desires expressed in the world around them. I believe something like this principle is there behind Jean-Paul's thinking here. If Jean-Paul's ideas are practical even to some degree, taxation implemented along these lines would lose a significant degree of its stigma. So tax avoidance (and evasion) and the associated industries would decline. Sure, accountants and tax lawyers would be weeping. But is that such a bad thing?
HH | 17 November 2013

Interesting topic but not so revealing in the way it has been discussed. Maybe just a quirky piece of sarcasm or cynicism aimed at the Australian Senate voting mechanism. The issue should concern all Christians but then there is not a mention of any Catholic or other denominational teachings on the matter of paying taxes. What alarms me is the tone of the discussion, not a mention of the common good needs of a nation or state. Such discussion could be quite anarchic rather than a promotion of progress for democracy.
Fr Mick Mac Andrew | 18 November 2013

I could find lots to criticise in this thesis, but one thing sticks out. "Specialists from economics departments in Australian universities might recommend ..."These are the same people who didn't see the GFC bearing down on us. God protect us from economists.
Frank | 18 November 2013

Similar ideas have been occupying my mind for some time, although I am less interested in the direct control of where my tax dollars go as in a clear account of where my tax dollars go. Consolidated Revenue is a labyrinth. Direct taxation accounts for a little less than 50% of it. What proportion of that < 50% is absorbed by each Commonwealth government department? Within each department, what proportion is absorbed by salaries and what proportion by capital expenditure? How many of the public servants on the payroll are dedicated to direct service-delivery and how many to administration? What are the relative salary costs? The answers to such questions would put us in a much better place to judge the efficiency and effectiveness (to use a time-honoured public service expression!) of our national government.
Rod Beecham | 18 November 2013

Gagnon's proposal relies upon the notion of "private" control of what has become "public" monies. It is fundamentally flawed for this reason alone. Can I suggest that citizens in a democracy already have the power through the election of political representatives to determine in general terms to whom and to what extent they want public monies spent.
Tom Cranitch | 18 November 2013

Have we forgotten that this nation is a 'Commonwealth'?
Ginger Meggs | 18 November 2013

A bad idea - the first part, a mechanism for showing where every cent is being spent would be a bureaucratic nightmare, and the second part fails to understand that we delegate this decision making to politicians because they have access to a lot more information, the help to understand implications of funding or defunding programs over time, and the time to consider the total picture, than the ordinary citizen has. And HH, for Goodness sake add some reading of history to your Christmas hols - do you imagine the poor enjoyed the poor-house?
Russell | 18 November 2013

Hi Russell! Any suggested reading? Hope it's not J.L & Barbara Hammond, F. Engels, E.P. Thompson, or Eric Hobsbawm - done that, lot of sloppy scholarship there. But I suspect lurking behind your words is the assumption that there were poor people in England in the 19th century because of nasty laissez-faire capitalism - ie, a small state. You'd never guess from Engels & co, but there were poor people galore all over England (and everywhere else) before capitalism came along! And there were a lot more of them per capita than in the 19th century UK, which saw standards of living rocket ahead thanks to trade and industry. Many of the poor had lived in charitable almshouses before the authoritarian Henry VIII, in his wisdom abolished same, throwing these wretched folk out to live or die wherever. The 19th century was a time in the UK when the state receded on many fronts, economically speaking. And lo! By the end of the century there were far fewer poor houses, or need for them, than at the beginning. The general population in the UK, including the poor, was much better off at the end of the 19th c than at the beginning (and in other capitalist countries such as the U.S. Indeed I find it ironical that as Leo XIII was preaching non-infallibly about the excesses and cruelties of capitalism, thousands upon thousands of southern Italian "boat people", as it were, ignored his warnings and flocked to the most capitalist nation on earth at the time - the U.S. - there to make a living sufficient to repatriate their wealth back to their poverty-stricken relatives in non-capitalist southern Italy). And of course, in capitalist (relatively small state) countries, the poor today are immeasurably better off than they were in, say, 1750 - especially in terms of infant mortality, longevity, diet, amenities, etc. & Please don't refer me to Dickens. Great works - not exactly peer reviewed studies.
HH | 18 November 2013

HH - we seem to have read entirely different things. I'm reading Lucy Lethbridge's "Servants: a downstairs view of twentieth-century Britain", but look, perhaps you've been reading too much and should get out more. I recently made a little tour of the U.S. and it's amazing what capitalism can provide - fabulous wealth, though unfortunately the underclass is everywhere. You can hardly get in the door of a Michelin starred restaurant without tripping over the beggars. So, go for a trip these Christmas hols - there's marvellous shopping, it's just unfortunate that a person can't live on the minimum wage in the land of the free (market).
Russell | 19 November 2013

And at whose expense, HH, were the people of Europe fed and watered, either at home or in their new-world diaspora? I suppose you'll be telling us next that even the displaced indigenous peoples of the 'new world' were better off too.
Ginger Meggs | 19 November 2013

Russell, the U.S. has moved a long way since the 19th c. It's been a big government economy for decades, especially since the 1960's when the "Great Society" program to abolish poverty actually ended up creating more of it. More thoroughgoing capitalist regimes in history (eg Hong Kong 1950-mid 1990s) have not had the problems of the U.S. today that you mention. G.M. - you seem to be implying that, had America been terra nullius, a capitalist economy would never have developed, there being no indigenous peoples to exploit. Interesting theory!
HH | 20 November 2013

"It's been a big government economy for decades". No, Scandinavia has big government - tax rates twice the U.S. and they don't have beggars and working people who also need charity to survive, while they do have comprehensive health schemes and excellent education systems. HH, were you ever in HK during the period you mention? There was grinding poverty, many people lived in spaces about the size of a battery hen cage and many lives were simply destroyed by the system. Mind you, they had to cope with huge immigration of people fleeing communism - people were living in the streets when I was there.
Russell | 21 November 2013

There may have been poverty in HK, Russell, but nothing like anywhere else, especially the U.S. today. And there was much more desperate poverty at the start than at the end of this period, by which time natural resource-bereft HK had sailed past resource-rich Australia in per capita income. And you're absolutely right about the huge influx of refugees from China and Vietnam, arriving penniless every year. It's incredible how HK handled this and how quickly they moved out of poverty. Despite the fact that it is 7 million people crammed into 1,100 sq ks (of which only about 300ks is habitable) - densest population in the world, there are only about 1000 sleeping in the streets (compared to 100,000 in Australia, pop. 26 million). Life expectancy (83+) is also better than Australia, U.S. and Sweden. Re Sweden & other Scandanavian countries: basically very laissez faire from late 19th century till 1950's, highest living standards in the world in that time. Creeping socialism till the 90s saw them slip back. Recent market reforms. Still very high income taxes and govt spending. But on many economic indicators (regulations, trade) are freer than economies like the U.S. Indeed, Denmark rates higher than the U.S. on the Heritage Economic Freedom Index, and Sweden, etc are not far behind.
HH | 21 November 2013

"sailed past resource-rich Australia in per capita income" - there you go again HH, it's all numbers with you, but what do they mean? I'm more interested in distribution of the wealth - a society with a few obscenely wealthy people and many poor ones is hardly a Christian society. This Christmas you could spend some time reading improving biographies - something about the experience of how life is lived; have a break from those spreadsheets..
Russell | 21 November 2013


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