Flat White

Since when has the taxman ever been a friend?

9 April 2018

11:41 AM

9 April 2018

11:41 AM

It is curious that Australians can be so apathetic about high taxation.

Being still in the final stages of the Easter chocolate haze, perhaps we should be reminded of the vilifying association of the term ‘tax collectors and sinners’ from the Bible.

But some Australians seem to regard modern-day tax collectors — the government and the Australian Taxation Office — as more Robin Hood than Sheriff of Nottingham.

How has this transformation been possible? Undoubtedly, it is partly due to a growing reliance on redistribution through the tax-transfer system — after all, why bite the hand of government that feeds you. But two other factors may also play a role.

First, there are the ATO’s efforts to be seen to target the ‘bad guys’, aka large multinational firms, as well as others (think mining magnates) who don’t easily lend themselves to the sympathies of average Australians.

Not to mention the ATO’s efforts in recent years to improve its public image, with PR strategies including the gimmicky ‘Alex’, the friendly virtual assistant who pops up on their website, pestering to help you. They’re clearly fans of everybody’s least favourite animated paperclip.

Secondly, the tax system is designed to take your money as stealthily as possible. The withholding system means that government takes your money before it hits your bank account; while other taxes — like GST, payroll tax, tariffs and excise — covertly increase retail prices.

Free market economist Milton Friedman understood that governments couldn’t possibly get away with so much taxation if it wasn’t concealed.

So if we want to hold governments to account for high taxes and wasteful churn in the tax-transfer system, we need to be more conscious of the taxes we are actually paying.

The challenge is how to do this. Perhaps we should look to Hong Kong where individuals are responsible for paying tax on their own salaries, instead of their employers. It is surely no coincidence that Hong Kong also has low rates of personal tax.

One thing is for certain: if virtual Alex turned reality and appeared at our front door demanding our money, we would soon revert to the Biblical view of tax collectors.

Eugenie Joseph is a Senior Policy Analyst at the Centre for Independent Studies.

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