Death and (unfair) taxes…

There comes a time when we all come to accept death and taxes, whether we like it or not. What I would like to know is when did Australians start to accept unfair taxes as the norm?

The lack of policies to get excited about during this Australian election campaign got me thinking and searching through all the policies that the parties have on offer. Rummaging through the scaremongering and hyperbole almost made me want to give up but knowing that that is exactly what the politicians want forced me to keep researching.

Many are the policies that I would disagree, question and downright reject (as I'm sure many people would as well, though perhaps not the same policies), however there was one that caught my attention: the Australian Democrat's income tax reform proposal (after the run of bad luck they have had they could use some good news). In Australia, the tax-free threshold is currently $6,000. Income tax is taken from every dollar over $6,000 earned in a financial year. To put this in perspective, assuming a 5-day work week, you can make about $25 a day tax-free.

Since Australia has a Goods and Services Tax (GST – a value-added tax), if you are spending those income tax-free $25, the government gets its tax take anyway. But back to the point I want to make: with low and controlled inflation over the last 20 years it boggles the mind why the tax-free threshold has not kept pace. Since the 2000-2001 financial year, the tax-free threshold has been $6,000. For the majority of the 90's ('91-'92 to '99-'00) the threshold was $5,400. In that same period the middle ranges have undergone various adjustments and the top range has increased from "$50,001 and over" in '91-'92 to "180,001 and over" in '08-'09 - an increase of more than 300%. For the current 2010-2011 financial year the minimum will still be $6,000 (not even a 12% increase on early 90's levels) and the maximum kicks in from $180,001 – there will be slight changes to the middle ranges.

I think it makes sense to raise the tax-free threshold – something that hasn't been done considerably for 20 years! It would benefit everyone and simplify the damn complicated process of tax that is income taxation in Australia.

Perhaps the lack of reform is because there's an accountants' conspiracy…

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