Welcome to Eureka Street

back to site

AUSTRALIA

Tax pain is our gain

  • 11 August 2010
Elections are illuminating in the sense that they effectively reflect the fears and hopes of the voting public. After all, fear and hope are natural responses to the prospect of change which elections represent.

The sentiments of fear and hope sometimes spin around the idea of taxation. In Sunday's Liberal campaign launch, Tony Abbott repeated the phrase 'big new tax' five times. It is assumed that he refers to the Mineral Resources Rent Tax (formerly the Resources Super Profit Tax) which is an industry tax, not a consumer tax. Yet the speech left the impression that ordinary voters must reject it for their own sake.

It is a familiar Liberal riff, reinforced by Abbott's statement that 'under the Coalition, spending will always be less and tax will always be lower than under Labor'.

This illustrates just how much fear is fused to the hip-pocket nerve during elections. Voters do not like the idea of tax because they would rather keep their money. Moreover, as reflected by campaign offerings from both major parties, voters also hope that government will give them back the money that they have already spent through rebates, while maintaining the infrastructure and services to which they are accustomed.

It is a vicious cycle and a cynical one. The language used so far in the election campaign implies that voters are purely self-interested, that their sentiments of fear and hope are individualistic.

Perhaps they are merely un-reflective.

The concept of taxation bears reflection. In a 2009 paper titled 'The Philosophy for Tax' written under the auspices of Australian think-tank Per Capita, Katherine Gregory identifies five core functions of taxes. These include funding essential social services such as police and public transportation, social investment such as health and education, as well as income redistribution and equitable access to these resources.

This is not usually the framework in which taxes enter political debate. They are instead presented as something to be minimised and endured. Even when new taxes are supported by moral argument, as perhaps in the case of a carbon tax, proposing them can prove detrimental, as former Prime Minister Kevin Rudd learned.

Yet somehow, as populations grow, environmental impacts deepen, and the pressure on sectors such as health and education increases, most Australians want to keep the status quo on taxes.

They need to be reminded that infrastructure and services generally work because, in