Debates around tax are too often seen as marginal to real life and not very interesting.
October’s tax forum offers an opportunity to challenge this misconception and do some hard thinking about what society we want and, crucially, how we should fund it.
The tax system funds all public services, public purchasing and the transfer system of benefits and pensions.
It affects what we retain out of what we earn, either though paid work or investments. It encourages and discourages various behaviours, either deliberately or incidentally, through tax concessions or extra taxes on specific goods or costs. Some of these increase fairness and some decrease it.
The taxation system is the major collective indicator of the commitment we have to the provision of public services and reducing the risks of dealing with issues like sickness, disability or unemployment as individual problems.
It is important to ensure there is enough money in the public pot to cover our social needs, not just economic ones.
This is particularly important for women and other groups who tend to need public support.
Women are still the main providers of unpaid care and are too often under-paid in employment.
The tax forum offers us an opportunity to explore how the tax system could be improved in more ways than just encouraging more workforce participation and economic activity.
The nation needs to have enough resources to cover costs for those in retirement and out of the workforce, as well as to support those of us in the workforce.
A number of often-overlooked issues need to be on the the forum’s agenda.
We need enough money in the public pot to meet the needs of an ageing population and other increases in care needs.
This may involve more resources for the increasing number of older women living on their own, often with few retirement savings.
We need to ask whether we should plan to increase our tax take as a proportion of GDP to cover our social needs.
Does our current budget fund enough education, health and community services to meet the needs of children, families, those with disabilities and with other support needs?
Do governments have enough money to pay good wages to the many workers in government-funded community services?
The debate around the Australian Services Union equal pay case suggests that funding it will not be easy.
How then do we put in place measures for increasing the public purse rather than following the pervasive mantra of more tax cuts? A fair agenda for a tax forum needs to cover a broad spectrum of tax options for raising more funds.
This would cover the connections between tax and the transfer payments system and include and examination of the adequacy of current payments.
Possible increased demand and the basic eligibility for particular payments are other serious issues.
The current base rates of payments for the unemployed is $132 per week less than the rates for pensions, and the new criteria for disability pensions will see more people move to Newstart.
This is grossly inequitable as it assumed that low payments will drive recipients into paid work. It also deeply insults the many on Newstart who want paid work but cannot get it. The payment differential ignores the lack of appropriate jobs and enlightened employers that contribute to jobseekers’ plight.
For some, the types of work they can do has disappeared, and there are few jobs they are eligible for. Some are seen as too old or have disabilities that employers will not accept. Underpayment of a decent minimum payment is not fair.
We need to discuss questions of the unit of payment. Tax on income is individual but eligibility for payments is set on assumptions of about shared income between partners.
I have raised the question of units of payment and how these are defined with the Henry Review, but this was not addressed in its report. What is the justification for the government assuming that two people share income because they co-habit?
When should we expect government support for people who limit their paid work time or engagement because of the care they offer to others?
We have partial paid maternity leave and family payments on a range of eligibility criteria that offer some additional money for particular families.
Do we accept that payments should distinguish between who earns the money (one parent or two)? If they combine Family Tax Benefits A and B, what extra help should sole parents receive?
Our transfers are based on means-tested payment system in most cases, unlike tax concessions that mainly go to the rich.
Are there some payments that should be universal because the costs incurred or reduction in time for earning income contribute to public good as well as family needs?
Some care payments should fit into this category as should the payments for disability costs. Horizontal equity is as important as vertical equity in some cases.
Will tinkering with the effective marginal tax rates make a serious difference to participation in paid work? It’s often the other losses such as transport concessions, health care cards and other payments that do much of the damage.
What would happen if they combine the two child care subsidies so those families deemed to be high-income earners get no subsidies? What would that do to the work choices of the lower female income earner?
Should there be a subsidy for child care in the same way there is a subsidy for education, even for the very rich?
Retirement income is a big problem. The costs of the Age Pension are now matched by the costs of the very generous superannuation tax concessions that mainly benefit high income earners.
The Henry Review recommended against raising the compulsory super contribution to 12% because it would not benefit low-income earners. The costs of concessions to high income earners will be an extra $8billion a year.
As this is unfair, how do we oppose the rise and work on a retirement system to raise the basic pension for those whose working life did not allow them much in savings?
So how do we put these questions on the forum agenda?