Recommended Reading: Australia, Australians and Taxation

Today’s recommended reading is two blog posts that have been inspired by recent debate in Australia about the government’s role in taxing citizens’ savings, especially that accumulated because of our system of mandated superannuation (pension). The main questions have been what rate, if any, these savings should be taxed, and should those who are relatively well off be taxed at a higher rate than those who are not.

One of the posts, by ACTU economist Matt Cowgill, deals directly with these questions. The other, by blogger and policy wonk Greg Jericho, considers the impact the introduction of a form of flat income tax would have on Australian taxpayers as a whole.

I rate these as recommended reading as these are opinions we are not likely to read in our Murdoch and Fairfax dominated daily press.

As a quick matter of context, and to add my own opinion to the mix, I’d also like to briefly consider what passes for economic debate in this country and why I think it is unique to other parts of the world.

First, is the above mentioned penetration of the Murdoch/Fairfax press duopoly. Others have written extensively about this so I will not go into it into detail here. Suffice to say that although as a western nation we reify the notion of the freedom of the press, we do no such thing for the diversity of media outlets. Nor do we adequately hold our free press to the high standards of truth that should be required by their privileged position within our society.

Second, and possibly more importantly, is the somewhat confused state which many of us approach these important public debates. And this, in no small measure, is largely a result of the above.

Australia, you see, is torn between the perennially diminishing power of the British motherland and its similarly diminishing welfare state (not to mention its various European counterparts to which we’ve often looked for inspiration) and the extreme capitalist individualism practised by America; our other ‘great and powerful friend’ from the other side of Pacific.

This leads to a problem where much political (and therefore public) debate is coloured by the cultural, political and economic hegemony of the United States. Whilst, at the same time, our history, institutions and political philosophies—and therefore much of our unselfconscious cultural (or common-sense) understanding of ourselves and the world—are built more upon the British/European tradition of the welfare state, albeit a significantly modified antipodean version.

The result is that Australians, for the lack of a better expression, often want their cake and to eat it too.

That is, we approach debates about taxation, welfare and the role of government believing that we should provided many of the traditional benefits that go along with the welfare state (and, at times, much more) because, hey, they always have in the past. On the other hand, we also have a tendency to believe much of what we’re told about the role of the individual, and more importantly individual wealth, in the economy. Much of which, as I’ve said, is delivered to us via channels controlled by those whose vested interests probably don’t align with yours, mine or most other ‘ordinary Australian’s’

This leaves public debate in a state where we are both demanding that the government make sure we get our ‘fair share’ of whatever subsidies the welfare state provides AND that it keeps its hands out of the pockets of ‘ordinary’—and by ordinary here we include even quite rich—Australian’s pockets.

The problem is, we just can’t have it both ways. Either the government is responsible for raising taxation and spending it upon the services and subsidies we demand of it, or it is not; and we go without many of the aspects of the welfare state with which we have become accustomed.

And here’s the rub, it just does not suit those who are most in a position to influence debate to illuminate this as a problem. That is, it doesn’t fit The Narrative that they are most willing to portray because it suits their interests to keep the public ill informed, and divided. So what we end up with is a situation where, when commenting on the Governmnet’s planned changes to the superannuation regime, the alternative Prime Minister can say something like this:

is a government which is prepared to tax the people to fund own spending.

Without it a) being challenged as seriously nonsensical; b) finding it reported as a legitimate critique of Government policy.

I, for one, look forward to not being taxed by an Abbott led Coalition Government which should miraculously also find itself having none of its own spending commitments.