Monday, March 25, 2013

Our attitudes to tax are hardening. Only others should pay more

Australia’s high earners are surprisingly magnanimous when it comes to tax. Many think the rich should pay more. They just don’t think that applies to them.

The two apparently contradictory positions spell trouble for Wayne Swan as he attempts to wind back tax breaks in the May budget.

“We are talking about the top 4 or 5 per cent of earners,” says David Hetherington, executive director of the Per Capita think tank. “People earning more than $150,000 are generally well disposed to the proposition that high earners should pay more. Around four in every ten thought that in our latest survey, but when we ask about their own situation the overwhelming majority think hey pay too much.”

“It is as if they don’t realise they are high earners. When the Treasurer cuts back on their tax breaks they will complain because they don’t think they are well off. Their complaints will be amplified in the media, to which they have better access.”

The annual Per Capita survey shows attitudes to tax hardening across the entire population with the proportion of Australians who believe they pay too much tax passing 50 per cent for the first time.

“While there remains a belief that the well off should pay more there is a view that everyone else is paying too much. A lot of it seems to have arisen in the belt-tightening that has followed the global financial crisis.”

“Australians are saving more than they have in years. They expect similar caution from the government, especially because as they see it they are getting less and less from the government."

“Pensions, university fees, school fees, health insurance - these are all things that once the government would have looked after. There’s a growing view that the government is no longer pulling its weight and that people can use their money better themselves.”

Around 85 per cent of those surveyed believe the government should spend more on health, but the proportion has slid from 95 per cent over the past two years...

Around 40 per cent believe the government should spend more on social security, down from nearly 70 per cent in the past two years. Support for spending on defence has dropped from 40 per cent to 28 per cent, support for overseas aid has slid from 18 to 10 per cent.

Asked specifically whether they would be prepared to pay more tax to support Gonski-style education reforms, 94 per cent of those surveyed said no.

“I am not saying the government shouldn’t fund these things, or that it shouldn’t attack tax breaks on superannuation and the like to find the money,” said Mr Hetherington. “But the survey suggests it will have its work cut out making the case. It’ll be accused of starting a class war and it’ll need to have its response ready.”

In today's Sydney Morning Herald and Age

So ignorant about the carbon tax are Australians that more than half think it has pushed up the price of petrol. Nine months on the tax that specifically excludes motor fuel is believed by 54 per cent of Australians to have pushed up prices at service stations.

Most who made an estimate thought their cost of living had climbed by $20 or more per week. Five per cent thought it had climbed by more than $100 per week.

The government’s modelling came up with $9.90 per week.

Asked about compensation 49 per cent said they received nothing at all. The compensation package introduced with the tax applies to 90 per cent of the population.

“Clearly the advertising campaign hasn’t got through,” said David Hetherington of the Per
Captia think tank, which commissioned the study.

“I was less surprised about ignorance about the technical side of tax than I was about compensation. After all, there is no reason every Australian should know exactly who it applies to and who it does not. But not to know about compensation means not knowing, or not remembering, what goes into their own bank accounts.”

“It looks as people have noticed the tax cuts and the upfront payments at first, and then forgot about them. By the second pay packet they had mentally banked the increase and assigned it to the past, even though it continues in perpetuity.”

“Around one million Australians were taken out of the tax system. It looks as if they noticed that at the time and then forgot.”

In today's Sydney Morning Herald and Age

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