Per Capita Tax Survey 2015
By David Hetherington
Australia has witnessed a remarkable shift in public attitudes to public spending and tax over the last two years. We no longer feel overtaxed. We want more spent on public services, especially health and education, and we are willing to pay more tax to enable that.
These sentiments were first revealed in the 2014 Per Capita Tax Survey, which marked a stark turnaround from earlier years of the Survey. In 2015, it is clear the same sentiments have hardened and that we are seeing a step-change in public attitudes after a decade in which anti-tax hostility was the norm.
Perhaps the most striking finding of the 2015 Survey is the extent to which Australians feel their tax system is unfair. Over 60% of respondents believe the system favours the wealthy. Overwhelmingly, they say that the wealthy and big business are not paying their fair share of tax. They view corporate tax avoidance in particular as a blight on the system. Only 3.2% say a tax cut for big business is warranted.
These changes have several probable causes. The first is that the Federal Governmentâ€™s alarmist rhetoric has convinced Australians that the budget position can no longer sustain regular tax cuts, and more broadly that over-taxation is not a genuine problem. A second is that the Governmentâ€™s approach to budget repair has inadvertently brought questions of fairness to the fore, demonstrating that the Australian public is strongly opposed to a range of regressive policies from the Medicare co-payment to the refusal to address over-generous tax concessions for the wealthy. Finally, the perception of unfairness is likely to be pronounced for wage-earners and households with children due to a weakening economic climate, in particular flat wages and rising unemployment. Economic insecurity and the fear of loss of livelihood are important drivers in the shift in attitudes towards tax.
This is the fifth Per Capita Tax Survey. The first Survey was in 2010, and it has been conducted every year since except 2013. In March 2015, the Survey asked a representative sample of 1,413 adult Australians about their attitudes to a range of questions on public spending and tax.
The specific results of the 2015 Survey are grouped into four main findings.
First, there is ongoing support for higher spending on public services. 69.3% of respondents want to see spending on services raised, while only 8.2% would rather spending were reduced. The most preferred areas for greater spending were health (with 83.3% support) and education (73.4%).
Second, we find that Australians are broadly comfortable with their own tax contributions. More than half of all respondents (53.2%) say either they pay about the right amount of tax or feel they pay too little. The gap between those who say they pay the right amount and those who say they pay too much is +12 points. This is a major turnaround from earlier surveys; in 2012, the gap was -16 points.
Third, Australians feel that the tax system is unfairly weighted in favour of high-income earners and large businesses. Two-thirds (66.9%) feel that high earners pay too little tax, and three-quarters (75.9%) think the same of big business. Over 60% say that the system favours the wealthy, and 65% think the best way to raise new taxes for public spending is to crack down on corporate tax avoidance.
Fourth the public strongly supports specific taxation and public spending policies which are progressive in nature. 77.6% of respondents would prefer spending were cut elsewhere to pay for more funding of public schools, and most of these think spending should be cut in the non-government school system. 55.6% of respondents are opposed to a Medicare co-payment at any level, and 58.4% want to see negative gearing either restricted or abolished.
These results explain much of the opposition to measures contained in the Abbott Governmentâ€™s first Budget, and why a number of them have since been abandoned. But they also suggest the government should do more to address some unfair aspects of the tax system. Policies to address corporate tax avoidance, negative gearing and superannuation tax concessions for the wealthy would be a good place to start. Given the political shift in the Abbott Governmentâ€™s second Budget, and the ongoing deterioration in the budget position, such policies are becoming more and more needed.
A healthy and fair public sector and tax and transfer system is an integral part of a healthy economy. And a sustainable budget balance is an indicator, rather than a cause, of a healthy economy. The results of this yearâ€™s Survey suggest that, deep down, the electorate understands these fundamental truths.Download the full paper