Submission to Tax Consultative Task Force
The Hon. Senator Brian Gibson,
Chairman, Tax Consultative
Task Force,
Room S1 96, Parliament House,
Canberra ACT 2600
Dear Senator Gibson,
Thank you very much for speaking at
our Public Meeting last week. We are very grateful for the time and effort
you gave to this function - your slide presentation was most effective and
informative.
Please treat this letter as a submission to your Tax
Consultative Task Force. We would appreciate the opportunity of making a
further oral submission if you are conducting such hearings. Below we
outline some general principles.
1. The greatest problem facing
taxpayers is that the Government takes too much of our
earnings. Where once Government expenditure was around 25% of GDP, it is
now over 40%. Taxpayers are working for the Government, not themselves,
for well over a third of their working hours. The Government's view is
that there should be no increase in the overall tax burden, but we submit
that your Task Force should recommend a decrease in the overall tax
burden.
2. The red tape involved in complying with taxation
requirements is too complicated and costly. It is estimated that it costs
a small business over $1,000 merely to complete the paper work - and that
is not counting the tax that has to be paid. It would cost families (which
are of the nature of a small business) even more as most families do not
have sophisticated computer or accounting skills. The Tax system must
be simplified.
3. Endeavour Forum's view is that tax reform
must also eliminate existing anomalies, the major one being the dichotomy
between the tax system and the social security system. The tax system
treats wage earners as if they are individuals and does not recognize
income sharing between spouses, while the social security system treats
wives as if they are part of a unit, supported by husbands and therefore
not entitled to benefits on the basis of their own lack of personal
income. We recommend of optional income-sharing between spouses.
4. Further anomalies arise in regard to children - the tax rate
for wage earners with one child is the same as the rate for those with
several children. Taxation should take into account the number of
dependents supported by the wage-earner(s).
5. The greatest
anomaly is in the area of child care funding, where those parents who
place their children in crèches in the care of strangers receive generous
government subsidies (not means tested) while those who choose to care for
their children themselves receive a pittance and even that is means
tested. The Government claims that there is a range of benefits for low
income families, but in our view the whole system of tax and benefits,
including child care payments, subsidies, Family Tax Initiative etc. is
far too complicated and is in urgent need not only of reform but of
simplification so that even those parents who don't have advanced degrees
in mathematics can evaluate their best options.
We would
consider an essential basis of reform is an elective (voluntary) system of
income sharing which recognizes the number of people sharing the family
income, and that in regard to child care funding all parents with
dependent children should be treated equally so that parents can choose
how they will care for their children. Every month new research
emerges showing that breastfed children are healthier and more intelligent
than those on artificial formulae, and that those children placed in day
care suffer more respiratory and gastric infections than those cared for
at home. The World Health Organisation is now recommending that it is
beneficial for infants to be breastfed for two years or more. Why then
does the Government penalize those parents who remain out of the paid
workforce to care for their children?
6. In today's Melbourne
Herald Sun it was reported that the Norwegian Government is paying parents
$600 a month provided they do not use a public day care centre. In our
view reform of the Australian tax system must be coupled with
rationalisation of the subsidies for child care. Even the Labor
Government-appointed International Year of the Child Committee recommended
that all the child care payments, rebates, subsidies etc. be unified into
one payment to all parents of pre-school children. The Australian tax
system must acknowledge that in a single-income family, the wage is
supporting two workers - the wage earner and the non-earning spouse who is
caring for children. The Federal budget for child care is now over $2
billion a year, but little of this goes direct to parents, and even what
does go to parents does not give them a choice of how best to care for
their children. Why are a child's parents the only ones excluded from
child care payments?
7. In regard to indirect taxes or a GST, tax
reformers should note that families with young children often do not have
a choice about expenditure. An adult can decide to do without a new
fashionable pair of shoes, but children need new shoes frequently as they
outgrow the old ones. A GST on essentials such as food and clothing would
impact heavily on families with young children. A just treatment of
families in the taxation system is the real issue crying out for tax
reform. No government can effectively compensate families for the
additional cost of living incurred as a result of a GST unless the
underlying tax system recognises the needs of families.
8.
Ordinary families are angered by the preferential treatment given the
wealthy, e.g. Crown Casino shareholders. Crown management spent $1 million
or more on the gala opening of the Casino and the lavish entertainment of
selected guests. Now the management is crying poor and asking for a
reduced tax rate and elimination of penalties for breach of contract.
Ordinary families who overspend on a celebration do not get such
consideration from the Tax Office.
Similarly with the expenditure
by Governments on entertaining the wealthy, e.g. at the Melbourne
Grand Prix. While ordinary families, especially those who live anywhere
near Albert Park have to put up with noise, the inconvenience of their
roads and streets being closed off for weeks, and the environmental
disfigurement of the park itself with grandstands, barricades etc. for
weeks, Governments appear to be able to entertain lavishly at taxpayers'
expense, although the event itself apparently runs at a financial loss.
There should be stringent limits on entertainment allowances, not merely
for Parliamentarians but for Governments, both State and Federal. Ordinary
families who are struggling to meet mortgage payments and car maintenance
expenses, feel angered by news reports of the Government entertaining
"high fliers" and "high rollers", whoever they are, with caviar, champagne
etc. What is the cost/benefit ratio of such expenditure? Are all these
entertainment expenditures tax deductible for particular wealthy
individuals? And if so, can ordinary families deduct the cost of their
evening meal or their cut lunches taken to work? The entire system of
tax deductions for entertainment needs reform so that ordinary families
are treated justly.
9. Why are married couples discriminated
against in the social security system? Why should so-called "single
parents" be entitled to benefits, while those who undertake the
responsibility of marriage are excluded? The term "single parents" is a
misnomer anyway there is another parent involved who is shirking his/her
responsibilities. Why should those who do accept their responsibilities be
forced to subsidize the irresponsible? The Government must take far more
effective measures to ensure all parents meet their responsibilities
towards their children. The current Child Support Agency will continue to
be ineffective until there is a reform of the Family Law Act and
enforcement of Access Orders, because many fathers who feel they have been
unjustly treated by the Family Court and have had their marriages
dissolved against their wishes and although they have committed no fault,
feel so aggrieved they refuse to pay maintenance to the custodial parent,
especially if she violates Access Orders and the father never gets to see
his children anyway.
10. In the 1950s an ordinary worker could
hope to buy a house and support several children on a single wage. This is
an impossibility today because the Government takes too much of his
earnings. Many men cannot afford to marry, and if they do, their wives are
coerced into the workforce and cannot have children or not as many
children as they would like to have. This does not make for a healthy
economy or a happy country. There must be a decrease in government
expenditure and a decrease in the tax burden. In other words, your tax
reform, far from being revenue neutral needs to be revenue decreased.
We would appreciate the opportunity of making a verbal submission.
Yours sincerely,
Babette Francis
National &
Overseas Co-ordinator
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