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December 7th, 2015

A new sandpit for long side discussions, idees fixes and so on. Discussions about climate policy and related issues can be posted here, along with the usual things.

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  1. Geof Edwards
    December 7th, 2015 at 08:38 | #1

    Doing away with the annual income tax return.

    I would like to hear the views of participants on the prospect of getting rid of the annual tax return for those wage earners with fairly simple affairs. I have drafted an opinion piece and seek some critical feedback

    ‘Red tape reduction’ they call it, when governments busily undermine environmental protections that have been built up painstakingly over many years.

    Yet virtually no one in government or their cheerleaders in business are proposing to abolish what is surely one of the most oppressive manifestations of government regulation: the annual tax return.

    My own tax return ought to be simple as I don’t run a business, don’t have to return GST statistics and don’t have complex foreign investments. I am an educated person who is familiar with bureaucratic paperwork. Yet year after year I agonise over the chore and procrastinate it to the last minute. How on earth do people for whom English is a second language, or who left school at 15 cope?

    How is any normal person expected to understand the distinctions between a superannuation income stream, a superannuation pension and a non-superannuation annuity, or whether they ever received a PAYG payment summary explaining the difference, and if so, which shoebox it might be in after having moved house during the year?

    The etax electronic form offers help with one hand, by pre-filling details of salaries, bank interest, Medicare payments and so on (although the extent of tracking by a range of agencies it reveals is rather unsettling). On the other hand, what does one do when etax demands knowledge of your spouse’s income which you haven’t yet calculated and then won’t let you click forwards or backwards until a figure is inserted? And the software won’t open your spouse’s file without re-logging in, and won’t open last year’s files at all.

    When I started my career, the tax return was a single sheet folded into four pages, including notes. What has caused it to now blow out such that it requires explanatory instructions that ballooned to some 180 pages before they went on line?

    The tax calculations have become encrusted with distortion upon distortion over the years. Partly this is because governments have tried to seduce blocs of voters with special concessions such as the small business capital gains tax retirement exemption.

    Partly the convolution is a byproduct of attempts to capture tax avoiders and evaders, and partly because governments are using the taxation system to pursue policy objectives which could be better achieved through straight budget funding or regulation.

    None of my plaint is related to a plea for lower taxes. Effective civic services require adequate taxation and the public understands this.

    The three traditional criteria for “good” taxes are efficiency, equity and effectiveness. Taxes reconciled through declarations on the annual tax return fail the test of efficiency.

    To aim for simplicity is not exactly the same as aiming for economic efficiency, but it would be a good place to start. In an era of digitisation, it ought to be possible for salaries and wages, investment, corporate profits and international transfers to be taxed at their source. Charities could submit returns of donations to the ATO for doubling. Artificial distinctions between self-education for the purpose of gaining another job and self-education for improving one’s competence in the present job could be abolished and the savings channelled to TAFE and the universities.

    The self-reporting that the Australian Taxation Office has put in place ought to have been a two-way contract: in return for placing the onus upon taxpayers to report all their income faithfully, the Australian government ought to have taken on the responsibility of making the system as simple as possible. It didn’t keep its half of the bargain, so it is time now to restructure the system.

    Tax reform is now more or less on the current public policy agenda. But it is being approached piecemeal, through lobbying by various interest groups or press releases by leaders advocating the laziest possible method of raising substantial funds – increasing the GST.

    A better organising principle for reviewing taxation would be to aim to abolish the annual tax return for the majority of citizens with simple affairs. The policy analysis necessary to achieve this would force governments to adopt a basket of the simplest measures such as the progressive income tax, land taxes and wholesale taxes on consumption of non-renewable fossil fuels and minerals. It could recalibrate taxes that are now hypothecated for specific purposes. Abandoning artifices such as dividend imputation and negative gearing that were always intended to funnel benefits towards the already wealthy would improve efficiency as well as equity.

    At the same time, a mission like that could allow the national government to adopt some principles such as taxing income at its source and refusing deductions between related parties that could plug the colossal leakage now caused by corporations shifting revenue overseas.

    A major project to restructure taxes would create winners and losers, but could be rendered palatable to most losers if it increased equity and simplicity at the same time. For the tabloid commentators who rail against official interference in the lives of ordinary citizens, here is a worthy cause.

  2. Ikonoclast
    December 7th, 2015 at 20:24 | #2

    @Geof Edwards

    I know where you are coming from. My wife and I have used an accountant for ten years or so to do our annual tax returns. We were both ordinary PAYE income earners until I retired. Standard family, 2 adults, 2 kids. Nothing complicated, no shares, no investments, no business, no negative geared properties. Yet we still needed an accountant to make sense of it all. It was all the little things like medical expenses, pharmaceutical expenses and ridiculous little deductibles of various kinds. I am sure the accountant cost us more than he saved us but it was worth it to not have to wade through all the c**p.

    But it shouldn’t be like that for people with straightforward circumstances. The ATO put ordinary people through a fine sieve but can’t get international corporations to pay tax at all. Could these facts be connected? Hmmm, I wonder.

  3. December 9th, 2015 at 22:13 | #3

    Both Marine Le Pen and Donald Trump campaign on a policy of zero Muslim immigration.

    At the same time Front National of France has made impressive gains in local elections. And The Donald’s campaign keeps imploding upwards.

    We have had 20 odd years of post-Cold War border less world globalist liberalism, incorporating both Left-wing ethnic liberalism (“multiculturalism”) and Right-wing economic liberalism (“efficient markets”). The main beneficiaries of this New Wave have been elites. The general populace, who have always been nationalist even if to polite to mention it, are a wake up to this scam.
    Particularly in France, the nation which has always presumed to reach other civilised nations how to think, in ideology and much else.

    And are making their displeasure felt. That gigantic rasping screeching noise you here is the sound of the Overton Window being dragged across the dusty cobwebbed void that once framed the unerringly straight face of the pious conventional liberal.

  4. Ikonoclast
    December 10th, 2015 at 06:04 | #4

    @Jack Strocchi

    There are some difficult problems but voting for right-wing extremists like Le Pen and Donald Trump will only make those problems worse. The real left has been warning for a long time that neoliberal economic and foreign policies would generate polarisation and extremism both at home and abroad.

    We have seen a somewhat borderless world develop for capital but certainly not for people. It is wrong to imply that, in terms of official policy, there is a borderless world for people. In terms of the reality on the ground, some borders (mainly European) are being breached by significant numbers of refugees with small admixtures of opportunists (illegal economic immigrants, criminals and extremists).

    Neoliberal policies of endless war and economic exploitation, especially in the Middle East, are driving these refugee movements. It is clear what we need to do to stop the refugee pressure. We need to stop destroying their countries and allow them to rebuild. Given how negative most of Western “help” is these days these countries would do probably better if we simply stopped interfering in their region altogether. Such “help” under neoliberal capitalism is really just capitalist countries helping themselves to the resources and cheap labour of undeveloped countries while delivering little to nothing in return except bombs and bullets.

  5. Geoff Edwards
    December 14th, 2015 at 10:04 | #5

    @Jack Strocchi
    Not sure whom you mean by “elites”, Jack. The Murdoch press uses the term as one of derision, gathering up into the term environmentalists, post modern academics, the true progressive left, and anyone else that they don’t like. They rarely use the term to describe the economics elite in business and government which has driven globalisation and has attacked various forms of national sovereignty such as protectionist trade settings.

  6. Geoff Edwards
    December 14th, 2015 at 10:06 | #6

    Thanks, Ikonoclast.

    They could be connected, if not by a global financial conspiracy, then by a common lack of ability to see the world as the grassroots strugglers experience it.

  7. Tim Macknay
    December 14th, 2015 at 19:14 | #7

    No Christmas present for Ian Macfarlane. Maybe Santa will bring him a sack of coal.

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