Per Capita Tax Survey 2011

September 23, 2011

Progressive Economics

Public Attitudes towards Taxation and Government Expenditure

By David Hetherington

Executive Summary

The Per Capita Tax Survey for 2011 has asked 1,300 Australians for their views on personal tax contributions, overall taxation levels, public service spending and new tax proposals such as the Minerals Resource Rent Tax and the carbon tax. Whereas much tax commentary is highly technical and driven by representatives of assorted interest groups, this Survey captures public attitudes towards tax and government spending, shining a light on citizens’ view of their own tax system.

The results demonstrate both continuity and change over the last twelve months. Australians continue to desire a more progressive tax system which sees higher income earners and big business making a greater contribution. As in 2010, we find that citizens want governments to spend much more on public services. We see a repeat of the two forms of cognitive dissonance observed last year. First, individuals want more spending on public services, but believe they personally should pay less tax. And secondly, many high-income individuals believe that the wealthy should pay more tax, but feel that their own tax levels are too high, despite the fact that on any objective measure, they are themselves wealthy.

There are also shifts in community sentiment since last year: attitudes towards tax have become less generous. More people believe they pay too much tax, particularly those nearing retirement age, and more say that high-income earners and big business pay too little tax. While still high, support for spending on public services has fallen considerably.

We also surveyed attitudes towards the proposed new taxes on mining and carbon emissions. A majority of respondents support a mining super-profits tax, and supporters of an emissions trading scheme outnumber supporters of a carbon tax by two to one. There is a distinct split between younger and older respondents, as younger people discount the future at a lower rate: they are more likely to support both the mining tax and carbon pricing.

Finally, we asked about Australia’s tax levels relative to peer countries and found considerable ignorance around Australia’s comparative tax levels. Most respondents believe that Australia is a high-taxing, big government country when in fact its tax-to-GDP ratio falls within the lowest 20% of the OECD.