“We have talked of income from saving as if it possessed a somewhat discreditable character. We have taxed it more and more heavily. We have spoken slightingly of the earning of interest at the very moment when we have advocated new pensions and social schemes.”
These were the words of Robert Menzies in a 1942 speech outlining the values that would underpin the Liberal Party. Menzies was disturbed by the confluence of increasing social benefits and tax policies that discourage self-reliance.
I came across the speech recently by chance, and it struck me as apposite to the contemporary debate about taxation of superannuation, capital gains, dividends and investor housing, which are all aspects of saving and the income generated by it. There is again a risk that public policy is turning against saving and self-reliance.
Calls for taxation to be raised in one or more of the above areas are filling the media. The debate has been one-sided, with critics of so-called tax concessions peddling misinformation and overlooking the principles underpinning features such as superannuation concessions and the capital gains tax discount.
Balance needs to be restored to a narrative that sees tax concessions as nothing but distortions and rorts favouring the rich and elderly, and as a source of easy and massive revenue gains. The message in Right or Rort: Dissecting Australia’s Tax Concessions — released by the CIS this week — is that there are sound policy reasons for many of the concessions now under attack.
It is fitting to reflect on these issues, as tomorrow is Tax Freedom Day. From New Year’s Day until today, the economy’s entire productive effort would have been just enough to satisfy the tax demands of all levels of government for the whole year, leaving the rest of the year for private consumption and investment.
The Abbott government says it wants lower taxes, but the trend of government spending — unless checked — points in the opposite direction, implying a later tax freedom day in years to come. If the critics of tax concessions get their way, higher taxation of saving will form part of a higher tax future.
Robert Carling is a Research Fellow at the Centre for Independent Studies. His latest research report, Right or Rort: Dissecting Australia’s Tax Concessions, was published on 8 April 2015.
Home > Commentary > Opinion > Reflecting on Tax Freedom Day
Reflecting on Tax Freedom Day
These were the words of Robert Menzies in a 1942 speech outlining the values that would underpin the Liberal Party. Menzies was disturbed by the confluence of increasing social benefits and tax policies that discourage self-reliance.
I came across the speech recently by chance, and it struck me as apposite to the contemporary debate about taxation of superannuation, capital gains, dividends and investor housing, which are all aspects of saving and the income generated by it. There is again a risk that public policy is turning against saving and self-reliance.
Calls for taxation to be raised in one or more of the above areas are filling the media. The debate has been one-sided, with critics of so-called tax concessions peddling misinformation and overlooking the principles underpinning features such as superannuation concessions and the capital gains tax discount.
Balance needs to be restored to a narrative that sees tax concessions as nothing but distortions and rorts favouring the rich and elderly, and as a source of easy and massive revenue gains. The message in Right or Rort: Dissecting Australia’s Tax Concessions — released by the CIS this week — is that there are sound policy reasons for many of the concessions now under attack.
It is fitting to reflect on these issues, as tomorrow is Tax Freedom Day. From New Year’s Day until today, the economy’s entire productive effort would have been just enough to satisfy the tax demands of all levels of government for the whole year, leaving the rest of the year for private consumption and investment.
The Abbott government says it wants lower taxes, but the trend of government spending — unless checked — points in the opposite direction, implying a later tax freedom day in years to come. If the critics of tax concessions get their way, higher taxation of saving will form part of a higher tax future.
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