Taxation: the price of civilisation or a form of theft?

Popular attitudes to public finance often seem to resemble a cargo cult. We want taxes to be lower, public spending to be increased and budgets to be balanced. Our more realistic selves know that we cannot “have it all”, that there is no “magic pudding”, but we are still prone to feeling that the taxes we pay are unfair and that the public services we receive are not enough.

All this is natural (and, for some people, eminently justi­fied). In the end, however, the capacity to provide govern­ment services depends largely on the level of tax revenue. Decisions have to be made as to who benefits and who pays.

Inevitably, and rightly, we expect such decisions to be fair. From the viewpoint of Catholic social teaching, they should reflect “a preferential option for the poor” – in plainer language, they should give priority to their impact on the wellbeing of poor people. They do not always meet this standard.

For instance, unemployed people who find part-time work while receiving Newstart Allowance can face an effec­tive tax rate of more than 60 cents in the dollar. By contrast, the highest rate of income tax is 45 cents in the dollar and applies only to taxable income above $180,000. This hardly seems fair.

Anomalies like this under­mine the credibility of the tax system, but should not be allowed to obscure the fact that that tax revenue makes possible a wide range of services that we are inclined to take for granted – pensions, health care and schools (to name a few). We would do well to recognise the value of the tax system as an enabler in creating a fairer society than would exist without it. This may not make us jump for joy at the taxes we pay, but may keep things in perspective.

Please send comments on the article, or requests for further information about the Commission, to Social.Justice@cg.org.au.