06 May, 2021 The Per Capita Tax Survey 2021
The annual Per Capita Tax Survey provides a unique insight into the views held by Australians of all ages, from across the country, about the role of tax and public services in our national life. Now in its 11th iteration, the 2021 Survey comes after perhaps the most extraordinary year in living memory, during which every aspect of life was disrupted by the COVID-19 pandemic and resulting recession.
We conducted the Tax Survey twice in 2020 – once before the onset of COVID, in February, and once again after the full impact of the crisis was beginning to be appreciated, in August. The results were striking: they revealed 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. It was impossible to know whether these significant shifts in public sentiment would self-correct 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 2021 Survey, which was conducted in early April, finds that some of the shift in public attitudes has, so far, stuck. Appreciation of public services remains higher than it was pre-COVID, as does support for long-term government borrowing to fund investment in the economy. Views about personal tax contributions, on the other hand, are largely reverting to pre-COVID positions, although there is stronger support across all income and age groups for wealthy Australians to pay more tax.
Some findings of the Survey seem to be eternal: a significant majority of respondents still believes that big business doesn’t 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 Government’s legislated personal income tax cuts dropped sharply in the wake of COVID, and has not recovered in the months since, with support for the tax cuts at just 29.3% while the proportion who believe they should be reduced or stopped is 43.3%. The issue remains divided along party lines: while 1 in 5 Coalition voters are happy with the distribution of Stage 3 of the tax cuts, this drops to around 1 in 10 among Labor and cross- bench voters.
Reversing Stage 3 of the tax cuts and diverting the revenue to fixing aged care was the most popular choice of the various options given to find sufficient funding to address the recommendations of the Royal Commission into Aged Care Quality and Safety, well ahead of a Medicare-style levy on all taxpayers.
Support for a ‘Buffett Rule’ to enforce a deductions cap on high-income earners remains popular among Australians, as does action to restrict negative gearing on investment properties, but views on the appropriate rate of the unemployment benefit are split: while a bare majority (52.3%) of respondents want to see the rate of JobSeeker further increased after the Government’s recent boost of $25 a week, there is no clear consensus on how much more should be provided, and almost a third of respondents do not support any further increase, with 20.5% saying the new rate is sufficient, and 11.2% believing it is now too high.
The Per Capita Tax Survey 2021 is, effectively, the first of the ‘post-COVID’ era. It provides valuable insights into public sentiment towards government’s role in the recovery, which we hope will be useful to policy makers in the months ahead.