The annual Per Capita Tax Survey provides a unique insight into the views held by Australians of all ages and backgrounds, from across the country, about the role of taxation and public services in our national life. Now in its 13th iteration, the 2023 Survey comes after some of the most extraordinary years in living memory, during which every aspect of life was disrupted by the COVID-19 pandemic and resulting economic turmoil.
We conducted the Tax Survey twice in 2020 – once before the onset of COVID-19, in February, and once again after the full impact of the crisis was becoming clear, in August. The results were striking, revealing a renewed appreciation of the essential services provided by government, less anxiety about personal tax contributions and a greater level of comfort with public debt.
This prompted a fascinating question: whether these significant shifts in public sentiment would revert, as social and economic circumstances stabilised, or whether the great disruption brought about by COVID-19 would result in lasting changes to the views of Australians about our tax and transfer system.
The Per Capita Tax Survey 2023 is, effectively, the third of the ‘post-COVID’ era. It was conducted towards the end of a year that saw cost-of-living pressures on Australian households grow to a point not seen in a generation, as high inflation in the cost of goods and services was met with an aggressive monetary policy response that lifted interest rates higher and faster than at any time since the early 1990s. While employment rates remain strong, most households have experienced rapidly rising mortgage or rental costs leading to significant pressure and many are struggling to make ends meet.
Against this backdrop, with disposable incomes evaporating and housing stress growing rapidly among low- and middle-income earners, we expected to see some notable changes in community sentiment towards government spending and income tax, and the 2023 Tax Survey did not disappoint this expectation. Attitudes towards the role of government in shaping the economy, the fairness of various federal taxes and the impact of our tax and transfer system on inequality of wealth, income and experience have hardened considerably in key areas of the Survey this year.
Nevertheless, some of the more notable shifts in public sentiment that came about as the country dealt with the COVID-19 pandemic have, so far, stuck. Appreciation for public services remain higher than before the pandemic, as does support for long-term government borrowing to fund investment in the economy, although this has shrunk considerably since the height of the pandemic.
Views about personal tax contributions, on the other hand, are largely reverting to pre-COVID positions, as households feel the pinch of higher costs and personal income tax contributions as a proportion of the federal budget have grown markedly over the last 18 months. Yet there remains strong support across all income and age groups for wealthy Australians and big business to pay more tax, and we see a growing recognition of the inequities in the application of wealth and income taxes.
Some findings of the Survey remain largely unchanged: a significant majority of respondents still believe that big business does not pay its fair share of tax, and that corporate tax avoidance affects the fairness of Australia’s taxation system, as they have since the Survey’s inception in 2010.
As always, some of the Survey’s most intriguing findings relate to issues in the current policy debate. Support for Stage 3 of the Turnbull Government’s legislated personal income tax cuts dropped sharply in the wake of COVID and had not recovered by the time of the 2023 Survey.
Support for the original design of the Stage 3 tax cuts was just 32.9%, while the proportion who believe they should be reduced or cancelled was 40.8%. Most respondents did not see the distribution of the Stage 3 tax cuts as equitable, but the issue remained divided along party lines: among Coalition voters, 1 in 5 respondents were happy with the distribution of Stage 3 of the tax cuts, but this dropped to around 1 in 10 among Labor and crossbench voters.
Support for a ‘Buffett Rule’ to enforce a deductions cap on high-income earners remains popular among Australians, and this year we reveal strong support for a windfall profits tax on large businesses during times of economic crisis, and a widely held belief that many firms are engaging in price gouging.
One of the more notable shifts in the 2023 Survey related to tax concessions for property investment, where people’s views have hardened considerably. Historically, the Survey has found high levels of uncertainty when respondents were asked about negative gearing, but in 2023 the proportion of those who were unsure about the application of this concession has fallen by more than 10 per cent in two years, undoubtedly reflecting the widely reported housing affordability crisis gripping the nation.
Only one in 5 respondents remains unsure of their views on property tax concessions, compared to almost one in 3 in 2021, while almost two-thirds (62.1%) wish to see negative gearing restricted in a way that would encourage greater supply of new and affordable homes, or abolished completely – the most popular response, at 22.2%.
We introduced new questions measuring respondents’ views about the experience of inequality in Australia in 2023, to complement our work on the Australian Inequality Index. Responses show that almost half of Australians would be willing to pay more tax if they knew that revenue would be put towards reducing income inequality (48.2%) or to create a fairer housing market (49.5%).
The 2023 Per Capita Tax Survey provides valuable insights into changing public sentiment towards government’s role in shaping the economy, which we hope will be useful to policymakers in the months and years ahead.
