Thursday, September 17, 2009

Tax Reform Not Just For The Chosen Few

Next month, the Secretary of the Treasury Ken Henry will have a meeting with representatives from business groups, accountancy firms and law firms, to discuss the likely recommendations of Dr Henry’s review of taxation. This is the wide ranging, so called “root and branch” review of taxation which was promised by the government and which is expected to set the foundation for the tax and welfare system for decades to come. For that reason it is vital that the interests of all members of the community should be adequately addressed in the process, and while the consultation with business groups is an essential part of that, questions are now being asked as to whether other interest groups will have a similar opportunity for input.

Unions for example are still waiting for the phone call. A representative of the A.C.T.U. has been quoted in the Sydney Morning Herald as saying “We’ve been concerned right from the outset that the review has been hearing more from business that it has from the wider community.” But it’s not just the unions who are concerned. Welfare groups are also patiently waiting for their invitations to participate in the process. Clair Martin, the C.E.O. of the Australian Council For Social Service wants the review to produce “fair and efficient tax reform that removes unfair loopholes and distortions, and an adequate income support system that keeps people out of poverty and assists them into employment where appropriate.”

There is no doubt that genuine tax reform is long overdue, but many people have previously expressed concerns that if the reform is designed by the people whose job it is to collect tax, without reasonable input from all sectors of the community, the result might be more about finding ever more efficient ways to extract dollars from the community rather than creating a fair and just tax system to serve the community. It would seem that when it comes to the business community, Treasury is keen to address those concerns. But the concerns of other parts of the community are just as legitimate.

It is often said that government should be run like a business, but that is misleading. If it was only run on a bottom line basis the result would be higher taxes and fewer services. In fact, it would be easy to suggest that is already happening. But the proper purpose of government is the stewardship of the community for the benefit of the community, and the purpose of tax is to pay for the services on which the community depends. Tax also provides an essential policy tool for discouraging unwanted activity and encouraging worthwhile pursuits through concessions, rebates or subsidies. Tax also funds the government’s operating overheads, but generally speaking the primary purpose of tax is to pay for community services, and while it is important for government finances to managed in a responsible and businesslike fashion, government itself is not a business and should not be seen as such.

For that reason, it is essential for the Henry Tax Review to address the concerns of both unions and welfare groups, and recognize the rights of the people whom they represent. Whether we are radio presenters or rodeo riders, politicians or police officers, we are all taxpayers and we all deserve a fair go in the process of tax reform. Whether we are working or unemployed, millionaires or working mums, businessmen or battlers, we are all citizens of a free and democratic community and we are all entitled to have the tax and welfare system working in the best interest of all of us, not just the chosen few.

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