Modern Times: An Argument for Increased Revenue

When two state premiers, from different political parties, called for an increase to the GST, a rare opportunity was born. The idea that governments need additional revenue to provide quality public services was agreed. Like many others, I was uncomfortable with their proposal of how the revenue would be raised, and uncomfortable that a champion of an increased or expanded GST could come from within the labour movement. But a former colleague persuaded me that the question of how to raise revenue – the ‘tax mix’ – is of secondary importance. Far more signi ficant was the popular acknowledgement that higher taxes are needed to pay for health, education and social security. We have been conditioned to view taxation as bad. We have been conditioned to associate it with a loss of personal freedom, and to decouple revenue raised through taxation from the spending required to maintain and enhance services. In doing so, we have diminished our commitment to provide excellent healthcare for our grandparents and equal access to quality education for our children. Few modern politicians have the courage to defend the idea that increased revenue is good, that quality services bring greater freedoms, or that extra revenue raised could enhance important services and guarantee essential securities. The temporary shift in our public conversation during the debate over an increased GST, in which the majority agreed that additional revenue was needed and argued about how we should collect it, was therefore surprising. These were crazy days. A Labor premier suggested we might increase a flat consumption tax, and a Liberal prime minister flirted with an egalitarian land tax. But the focus of debate then shifted from the need for additional revenue to which taxes were ‘fair’. When arguments depend on our subjective belief in what is ‘fair’, the debate loses its shape in the semantic smoke and mirrors. Some think it is fair that professionals who invest wisely earn obscene amounts of money. Others think that it is fair that the less fortunate are given the chance to catch up. We cease to talk about ends we wish to achieve, and focus on our interpretation of fairness. Problems of ‘fairness’ and ‘efficiency’ are important. Our tax system remains overly complex, tax concessions are frequently abused, and tax avoidance or minisation is rife. We must constantly strive to deliver services more e fficiently, and to modernise our service systems. But these issues should not detract from the idea that the foundations of our society are made strong through the collection of revenue through taxation. Fewer people now subscribe to the idea – so popular for two decades – that less taxation equated to greater freedoms. Fewer are convinced that an individual’s main desire is to be left alone to get rich and shop. As John Stuart Mill wrote in his Principals of Political Economy, the idea of “a society only held together by the relations and feelings arising out of pecuniary interests” is essentially repulsive. The evidence that higher taxation and strong welfare can enhance, not constrain economic performance, is also growing, as is the belief that better public services delivered to the middle class frees discretionary spending which creates opportunities for employment. Even if such an idea had been become orthodox in recent times, people are beginning to see that the reality is somewhat di fferent. But it is not enough to critique the orthodoxy of the day; it is crucial that a positive argument is made for the alternative. It is not too late to prosecute anew the need for a taxation regime that re flects public demand for quality education, health, transport, decent pensions, social welfare and access to a ffordable housing. The provision of such services is the foundation of the modern state and, for a long time, served societies across the world well. It served those living in remote areas, who are now denied services that cannot be delivered pro fitably by private interests to locations with no economy of scale. It served the interests of elderly citizens who rely on regular public transport, even if the regularity and scope of such services render them unpro fitable. It served the interests of young people who were a fforded a quality education and health services. And for citizens who could a fford private health, education, housing and transport, their interests were served through participation in a common project with shared social objectives. Australians are once again prepared to consider the merit of higher taxes used to provide quality public services, so it is incumbent that such an argument is compellingly made. The question of how the additional revenue is raised comes next. @AndrewHunter__