Opinion & Commentary
Treasurer has us on longer leash
Tax freedom day this year is April 25. This means it is a holiday for most Australians, for April 25 is also Anzac Day. Perhaps tax freedom day should be declared a holiday every year, for it is well worth celebrating. It marks the day of the year when we finish paying for the Government's annual spending and start to keep what we earn for ourselves.
One hundred years ago, tax freedom day fell on January 24. In those days it took the country less than four weeks to generate enough money to pay for everything the federal, state and local governments needed to spend. For the remaining 48 weeks, people worked for themselves.
By the outbreak of World War II, tax freedom day had stretched to the end of February, and by the 1950s it had reached March 19. It lurched into April during the Whitlam years as government spending rocketed.
Whitlam may be long gone but the profligacy of governments has continued and tax freedom day has fallen later and later. By 2000 it had drifted out to April 21. Last year it was April 23. This year it is April 25. That's another two days this year we have to devote to paying for the Government's spending rather than working for ourselves.
The Treasurer maintains we are a low-tax country. He points to his recent report comparing Australia's tax burden with that of other developed countries. It showed that overall our Government soaks up about the average amount of tax for all western governments, although Japan and the US manage on significantly less.
But the question to ask is not how our Government's record compares with European spendthrifts such as Sweden or Belgium.
Instead we should be asking why our politicians and bureaucrats keep taking ever-increasing amounts of our money as the years go by. Why do their demands invariably seem to grow rather than shrink?
The main reason tax freedom day this year falls two days later than last is that the commonwealth Government has been absorbing huge increases in income tax revenues. In the past 12 months it collected 9 per cent more in personal income tax, 13 per cent more in tax from superannuation funds, and 19 per cent more in income tax paid by companies. Even though Canberra's spending has been spiralling, the Government is now raking in so much cash it is expected to declare a budget surplus this year in the region of $14 billion. This surplus is clear evidence that wages, savings and profits are being over-taxed.
Every dollar generated in this country since New Year's Day has been taken by governments. Some of this money has been spent wisely on essential services, but much of it is wasted. The best people to judge how our money should be spent are not politicians but the people who earn it in the first place. If we don't want tax freedom day coinciding with the Queen's birthday holiday, governments must get their spending under control and start reducing taxes.
Professor Peter Saunders is social research director at the Centre for Independent Studies in Sydney.
