SUBMISSION TAX CONSULTATIVE TASK FORCE
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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