Bring on warm and fuzzy taxes

Bring on warm and fuzzy taxes

November 25, 2012
German Chancellor Angela Merkel ... wants to put more Greek and Spanish youth on the dole.German Chancellor Angela Merkel … wants to put more Greek and Spanish youth on the dole. Photo: Reuters

We face a surplus curse. The desire to be in surplus is doing and will do nothing for the health of our economy.

Only to those who worship at the altar of neo-liberalism does it make any sense. OK, our economy is not that of Greece or Spain, where austerity is devastating. Half the youth of those countries are unemployed – and the German Chancellor, Angela Merkel, and the managing director of the International Monetary Fund, Christine Lagarde, want to put yet more Greek and Spanish youth on the dole. (There was never any chance that Greece and Germany could survive in the same monetary union. To believe otherwise was just French and German neo-liberal arrogance.)

However, in Australia we are light years away from such problems, if not the neo-liberal arrogance. Nonetheless, here we are having our own dose of austerity – or at least some of us; that is, the poor and disadvantaged.

But let’s accept that the Australian Treasurer, Wayne Swan, is determined to maintain his surplus, even if it is only because he will be upset if he doesn’t and loses political face.


So, what should he cut to get us into surplus? What services can the nation most readily forgo? Why not cut the private spending of the better-off?

Not so long ago, Swan was sounding off at mining billionaires Gina Rinehart, Andrew Forrest and Clive Palmer, and I think quite rightly, too. But where has that gone? Was it just rhetoric?

Nowhere is the issue of raising taxes to get into surplus mentioned.

Now this is odd. Surplus is about bringing in more than goes out. You don’t need even economics 101 to understand that. What Swan and his supporters (and most of his detractors) seem to look at is only the outgoings side of the equation: what public services to cut. How¬†one-eyed can one get?

Let’s look at the input side. Now, we are a low-taxed nation. That needs to be said again and again because too few Australians realise or acknowledge it.

Our public sector as a proportion of gross domestic product is small in comparison with those of, for example, the Scandinavians. The Danes’ national tax burden is nearly 50 per cent, while ours is less than 31 per cent.

There are so many things private individuals and families cannot do or struggle to do. Many of these are in the ”warm and fuzzy” category, such as being proud of our country (instead of being ashamed of our policy on refugees); such as providing opportunities for a good education for all (instead of watching the value of education fall further and being measured in something other than some principle of developing a good, caring and critically informed citizenry); such as knowing everyone has access to good-quality healthcare when they need it (instead of seeing Medicare being eroded); and such as celebrating Aboriginal Australia (instead of indulging in the racism and apathy that currently exist).

Some of these tax-loaded issues do have tangible outcomes, but if we are to achieve them, there needs to be a recognition that they are driven primarily by warm and fuzzy sentiments that come under the broad heading of compassion.

Taxation cannot buy compassion, but it allows it to develop. An economic surplus seems to make sense to the Treasurer. For many economists such as myself, it is a mistake, in economic terms, to aim for a surplus at this time. But if we are to have a surplus, let’s not cut services but raise taxes and foster social compassion.

Taxes are good for all of us. They not only allow us to be socially compassionate, they encourage us to be involved as citizens, to think through how we want our tax money used and to take part in public debate about what sort of society we want to be.

Warm and fuzzy? Unashamedly so. Why not push back the tide of materialist consumerism that seems to be enveloping us and rethink society’s values? It might mean forsaking a new barbecue or delaying a new car or rethinking a holiday. Worth it? I think so, but let’s at least put it on the agenda.

The ”deficit” in thinking about such values is present in an Australia that is obsessed with private consumption and in a Treasurer transfixed by the notion of an economic surplus.

But if we are lumbered with this surplus fixation, let’s at least think about resolving it not by cutting services to the disadvantaged, but by raising taxes for the advantaged and, at the same time, build a more decent and compassionate Australia.

Gavin Mooney is an honorary professor at the University of Sydney.

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