Per Capita Tax Survey 2016Download the full paper
by David Hetherington
The results of this year’s Survey can be organised into four main groups. Firstly, the public believes we have a revenue problem rather than a spending one. We need to fund more spending rather than cutting our spending to match our revenue capacity. Overwhelmingly the public says they wish to see more spending on public services, rather than less. 65% of respondents say governments should spend more on services, including almost 40% who say we should spend a lot more. By contrast, less than 12% say governments should spend less.
Secondly, there is a growing personal willingness to pay more tax for better services.
64% of respondents say they’d personally pay more tax for better health and aged care services, up 12 points from last year. Almost half (47%) say the same for better schools, universities and TAFES, up nine points from last year. Notably, 43% of people say they’d personally be willing to pay more tax for long-term economic growth, suggesting they link their tax payments to the kind of public spending – on education, health and infrastructure – that sustains economic growth. These are remarkable statements of “willingness-to-pay”.
Next, respondents are clear about how they wish additional revenue to be raised. First, the public does not want further borrowing to pay for increased spending on services: only 3% believe this is a good idea. Instead, the public supports a series of specific alternative proposals. For the most part, these are not additional income taxes but the removal of avoidance or concession opportunities which allow people and companies to reduce their tax.
Almost 70% believe we should cut down on corporate tax avoidance to pay for more services. 57% of respondents say negative gearing should either be restricted or abolished. Support for the removal of the 50% capital gains tax discount has jumped by six points over the last year, up to 22%. Alongside these, there is also strong support for raising additional income tax revenue from high-income earners. Two-thirds of respondents believe high-income earners pay too little tax, and almost one half support higher income taxes on the top 5% of earners.
Finally, it is strikingly clear that Australians think the tax system is unfair, and favours large corporations and the wealthy at the expense of other citizens. This sentiment is widely held and gathering increasing support in the community. 83% of respondents say that corporate tax avoidance affects the overall fairness of the tax system, up three points from last year. 61% say this avoidance affects it a lot. When asked which group our tax system favours the most, two-thirds of people nominate “the wealthy” a jump of four points over 2015. 69% of respondents support a “Buffett Rule” under which the top 1% of earners pay a minimum average tax rate.
These findings offer a clear expression of the Australian public’s preferred fiscal policy. They’d like taxes raised to fund more spending on services, rather than see spending cut to reflect falling revenues. They’d like to see taxes increased and concessions reduced in ways that increase the overall fairness of the tax system, and they think that corporate tax avoidance in particular is the place to start. As detailed policies emerge in the lead up to the 2016 Federal election, we’ll see whether Australia’s major political parties agree.Download the full paper