There are many things in life which conjure unhappy thoughts but in reality, are not so bad. Things that might make us shudder to think about, but actually get a worse wrap that they deserve. Vaccinations, for example - a moment’s pain for a lifetime of protection. Or high school maths exams, which might seem like a pain at the time but come in very handy when you’re trying to work out the temperature on a visit to the USA.
I would argue that ‘tax’ is a third example.
Having just lived for three years in Denmark, renowned for their near-50% income tax, I think we have it all wrong when it comes to how we perceive taxation and paying tax.
Here are 5 reasons why I would argue ‘tax’ is a not dirty word.
1. Tax can be very healthy
Although the thought of paying tax might make us feel ill, taxation is actually very healthy. At a population-level, tax has been essential in the control and reduction of disease from tobacco, for example. In short, we know that the more we tax tobacco, the less people will smoke (and less smoking means less disease). In addition, thanks to the visionary work of VicHealth leading the charge in the last decades we can double this health payout by using the extra revenue for health promotion (e.g. Quit)!
In fact just this last week Mexico, a nation struggling with some of the highest rates of obesity and chronic disease in the world, announced a range of new tax measures to tackle unhealthy food. Including 8-10% taxes on soft-drink (soda) and junk foods, the hope is to reduce consumption but also rein back some of the social costs of their obesity epidemic.
2. The whole is greater than the sum of the parts
We don’t each need a road, or a hospital, or a school - but collectively we need all three and more. It might sometimes seem like a small cut in taxes is a win for all, but when you consider there are more than 11.5 million tax-payers in Australia alone - suddenly a few dollars means a lot!
A ‘fiver’ from each of us, for example, could fund the national Royal Flying Doctors Service for an entire year, and $100 from each tax-payer could fund a new major cancer research hospital for one of our state capitals.
More than this though, there is good evidence that public, collectively funded healthcare systems are more efficient than those that are privately funded - in other words, we save money by putting our contributions into one big basket from which we then provide healthcare to all.
3. Paying tax doesn’t have to make us miserable
The thought of a tax return is enough to make anyone’s smile turn upside-down - but actually some of the happiest nations in the world pay the highest tax rates.
Danes, for example, are among the happiest (if not the happiest) people on earth and yet, pay almost 50% in personal tax - and the concept of a tax deduction is also non-existent. Some would argue that this is because they get free, universal healthcare and education in return, as well as a year of maternity or paternity leave. Maybe it is just the warm and fuzzy feeling they get paying money into a collective pot. Either way, it doesn’t seem to be getting them down.
4. It’s how we pay for health and education
The government doesn’t (usually) just print money to make the services and infrastructure we all use on a daily basis - and the tax we pay doesn’t disappear into a big, black hole (although it may sometimes feel like it). The tax we pay is exactly what the government (who we elect) have to invest in the hospitals, roads, railways, schools and parks that we all need and want. This is the most important concept to keep in mind when we all call for tax reductions and look for ways to minimise the amount we pay.
Less tax just means we have less to use on the nation’s needs, and less to invest in the community’s future.
5. Taxation is democratic. Don’t be annoyed by tax - just demand to know where it’s going
Finally, don’t be against tax - be against waste.
Don’t elect government that will simply collect less tax (or at least, don’t continue doing so) because eventually we will have too little to fund our essentials. Exercise your democratic powers not to reduce tax, but to maximise the outcomes and ensure that the tax that is collected is used in the way you want it to be used.
Tax is not bad - waste is bad.
A taxing thought.
Taxation is the road you drive on, the medication your grandfather is taking, the TAFE course your cousin enjoys and the doctor you take your child to.
‘Tax’ is not a dirty word - and should be celebrated as a marker of democracy, not avoided as a collective hindrance. If manageable and progressive, it can do great things.
Not a taxing, but important, notion.
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Connect with Sandro on Twitter via @SandroDemaio.