Public Attitudes towards Taxation and Government Expenditure
by David Hetherington

Executive Summary

There has been a marked turnaround in Australians’ attitudes to public spending and tax over the last 18 months. Between 2010 and late 2012, our views of the tax system became steadily less generous – we felt increasingly that we were paying too much tax and our support for public spending, while high, was falling.

These sentiments have now reversed. Rather than saying they pay too much, Australians now claim they are paying about the right amount of tax, and their support for higher public spending has risen. They believe that spending increases should be paid for with higher taxes on top income earners, and through the removal of tax concessions on superannuation and housing. They reject the approach to spending cuts mooted by the Government’s Commission of Audit.

This change has been driven by several factors: the retreat of alarmist rhetoric around the carbon and mining taxes; the absence of major economic pain arising from those taxes; an acceptance that the end of the commodities boom means we can no longer expect tax cuts without service reductions; an increased focus of ending “the age of entitlement”; and a growing realisation that Australia is not the high-tax country we have previously held it to be.

This is the fourth Per Capita Tax Survey. In February 2014, the Survey asked a representative sample of 1,445 adult Australians for their views on a range of tax and public spending issues.

The results can be grouped into four primary themes, three of which constitute the reversal of trends from the earlier Surveys.

The first is that a majority of Australians (53%) now believe they pay about the right amount of tax, a jump of 17 percentage points since the last Survey. By contrast, the share who say they pay too much tax has fallen by 18 points.

The second theme is a turnaround in support for higher spending on public services. The share of those who want to see spending increased or maintained increased by eight points to 85%, while those who wish to see spending cut fell by four points to 8%.

Thirdly, Australians increasingly view the tax system as unfairly regressive: we believe those at the bottom and the middle of the income ladder are paying their fair share of tax, but those at the top are not. After falling in earlier Surveys, the proportion of those who said that high income earners paid too little tax jumped by 17 points to 72%. Simultaneously, there were significant jumps in the proportions who said that low- and middle-income earners and small businesses pay the right amount of tax.

The final theme that emerges from the Survey findings is that Australians want increases to public services to be funded by high income earners who they do not perceive as paying their fair share. 69% of respondents said that increased funding for public services should be paid for by tax increases on the top 5% of income earners or removal of tax concessions on superannuation and housing, which also flow primarily to high income earners.

Clearly, these sentiments are not echoed in the approach taken by the Abbott Government in the 2014 Budget, where spending cuts have been the primary mechanism for reducing the budget deficit.

It appears that Australians are increasingly acknowledging that they are not overtaxed, and that for services to be maintained as we want them, the tax take must be lifted in a fair fashion. This is consistent with both international comparison data showing Australia’s low levels of tax, and the drop-off in our tax revenue base since the end of the commodities boom.

Australians understand that our fiscal challenges are not the result of too much spending, but of too little tax. They want the Federal Government to respond accordingly.



AUSTRALIA – Fair Work Commission increases minimum wage by 3%

Anna Patty
Published: June 5, 2014 – 11:02AM

The wages of Australia’s 1.5 million lowest paid workers will increase by an extra $18.70 per week from July in response to a decline in their living standards.

Fair Work Commission president Justice Iain Ross delivered the decision on Wednesday to increase the minimum wage by 3 per cent to $640.90 per week or $16.87 per hour.

Justice Ross said the distribution of earnings had become more unequal in recent decades and the annual wage review had a role to play in ”ameliorating inequality”.

”While real earnings have generally increased over the past decade, earnings inequality is increasing,” he said.

”This has reduced the relative living standards of award-reliant workers and reduced the capacity of the low paid to meet their needs.”

The decision comes as the business community and unions mobilise for a fight over weekend penalty rates.

Prime Minister Tony Abbott, who made a pre-election promise not to reform penalty rates in his first term, is under pressure from his backbench and business to cut weekend and holiday penalty rates.

The Fair Work Commission last month ruled to limit Sunday penalty rates for some restaurant and cafe staff from July, expected to save businesses up to $112 million a year.

Justice Ross said solid growth in the Australian economy, relatively low unemployment and moderate inflation had supported a rise in the minimum wage. The superannuation guarantee rate to apply from July had been a ”moderating factor”.

Trade unions had called for a $27 (3.9 per cent) increase in the minimum wage from $622.20 – three times the increase recommended by the Australian Chamber of Commerce and Industry.

ACTU Secretary Dave Oliver said the Fair Work Commission’s decision was unfair in the context of Wednesday’s National Accounts figures which showed the economy was strong, but wages were lagging behind.

”Today’s decision means that low paid workers including cleaners, retail and hospitality staff, child care workers, farm labourers, and factory workers will fall even further behind the rest of the workforce,” Mr Oliver said.

David O’Byrne, Acting National Secretary of United Voice said the increase would only cover the 2.9 per cent inflation of the past year. ”It condemns the one-and-a-half million workers and their family who rely on the minimum wage for their pay increases to continuing hardship,” he said.

Jos de Bruin, chief executive officer of the Master Grocers Australia/Liquor Retailers Australia said the increase was disappointing for retailers who would be forced to review staffing levels next financial year.

He said the minimum wage increase was on top of the 0.25 per cent increase in the superannuation guarantee payment that will rise to 9.5 per cent from July.

”This is very disappointing news at a time when the retail sector is experiencing unprecedented economic and competitive challenges,” he said.

Australian Industry Group chief executive Innes Willox said the 3 per cent minimum wage increase was too high and a ”risky decision that puts the interests of workers with secure jobs ahead of the unemployed and those in less secure jobs”.

Employment Minister Eric Abetz said the government recognises the annual wage decision and is focused on building the economy to provide stronger employment growth.

Follow us on Twitter

This story was found at:




Pakistan Earning $2 a day, 60.19% population live below poverty line

ISLAMABAD: The Economic Survey for 2013-14 on Monday revealed that if the poverty line is $2 per day in line with international standards for middle-income countries, then 60.19 percent of the population fall below poverty line in Pakistan.
The survey revealed that this figure is according to the World Bank’s Poverty Head Count Analysis 2014. However, if income per adult in Pakistan is taken as $ 1.25 per day, then 21.04 percent of the population falls below poverty line at 2008 population estimates. The position of poverty in Pakistan is better than India and Bangladesh but Sri Lanka, China and Philippine’s are in a better position than Pakistan. The percentage of population below $2 per day in China is 29.79 percent; Bangladesh 76.54 percent, Indian 68.72 percent, S Lanka 29.13 percent, Nepal 57.25 percent and Philippines is 41.53 percent.
Pakistan has adopted the Millennium Declaration in the year 2000, and is committed to ‘spare no effort to set free the most vulnerable segment of population from the abject and dehumanising conditions of extreme poverty’. The Government of Pakistan recognises that eradication of poverty & hunger to meet Goal-1 is a first step in promoting a just and progressive society.
Under MDG-1, Pakistan aims to halve by 2015, the proportion of people living below the national poverty line, achieve full and productive employment and decent work for all, and halve the proportion of people who suffer from hunger.
According the Economic Survey of Pakistan, Poverty is defined as “a state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that’s considered acceptable in society”. Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity.
Poverty and Social Safety Nets: Poverty is measured traditionally in terms of ability to meet a minimum number of calories in-take or to have a minimum level of income to satisfy basic needs of an adult per day because poor spend sixty percent of their income on food related expenditures.
The Government of Pakistan is committed to improve the livelihood and earning capabilities of the poor to eradicate extreme poverty, the government has started a spectrum of social safety net programs for creating opportunities for the poor to escape poverty and to increase their resilience to crises. Benazir Income Support Programme (BISP) is one of the most popular and well-thought interventions of the government. Present government has continued the program with total disbursements Rs48.18 billion up to March 2014, in terms of cash grants and the number of beneficiaries increased to 5.25 million.
Pakistan Poverty Alleviation Fund (PPAF) is also contributing a large amount of funds and different interventions are being made for reducing poverty and hunger, enhancing gender equality and women empowerment, improving maternal health and child mortality and increasing community participation. PPAF’s role in micro-credit, water and infrastructure, drought mitigation, education, health, and emergency response interventions has been widely appraised. Total disbursement through PPAF during the period July to December 2013-14 is Rs 8.414 billion.
After the 18th Constitutional Amendment and passing of 7th National Finance Commission (NFC) Award has resulted in a paradigm shift from the previous sole emphasis on overall macro-economic growth as well as Inter and Intra-Provincial development priorities. The 7th NFC Award offers greater chunk of funds from federal to provincial governments that will provide more fiscal space to provinces to play their role in addressing intra-provincial disparities. Now most of the projects related to social sectors are planned and implemented by the provinces, while federal government can only concentrate to allocate larger chunk of the budget towards the development of infrastructure, energy and quality improvement of social sectors. The government is taking various measures to keep stable the inflation rate on single digit through prudent expenditure management, tight monetary policy, better supply chain management and monitoring of the prices & supply position of all essential items by taking all the provincial governments on board for the relief of common man.
The Economic Survey revealed that the efforts will be made to improve overall economic governance, devise social protection policy and strengthen pro-poor institutions that would result in better implementation of poverty reduction strategies and improving HRD indicators by allocating a fair amount under different schemes for social safety net programmes with the aim to directly intervene to transfer resources to the marginalised segment of the society.

Solar Panels in Pakistan

People resort to solar panels for continuous power supply

ISLAMABAD: The residents of the twin cities are opting for solar panel systems to get uninterrupted electricity supply and bring relief in their lives during the hot summer season.The government is making all-out efforts to overcome the power crisis and for the purpose, a number of power generation projects have been launched, which would take some time to complete. However, at present, the demand and supply gap is surging in the wake of the rising temperature, due to which the duration of power outages is also increasing. People using generators run on petrol or diesel, complain of high fuel cost, while the uninterrupted power supply (UPS) systems lack back-up or power storage capacity to fulfil the needs during load-shedding.Though the use of solar panels is effective, but they are out of the reach of a common man because of the high installation cost. That is why the panels can be witnessed in the posh areas or houses of well-off people in other localities. Rizwan Ahmed, an industrialist, said that besides being reliable, the solar panels are more cost-effective than generators being run on diesel or petrol. The installation cost is high, but it is a onetime expense and then one could enjoy uninterrupted power supply for 24 hours, he added.“Installation of a 1,120 W solar panel costs Rs 392,000, but now I am enjoying 24-hour uninterrupted electricity supply,” said Shahid Abbasi, a resident of Sector I10. Rauf Khan, a shopkeeper at G8, who deals in solar panels, said that the sale of solar panels had increased in recent years. Most of the people complained that due to prolonged load-shedding, the UPS did not give the desired results. A single solar panel of 280W cost Rs 98,000, he added.






Pakistan industrial sector contributes to around 20.8 percent to the GDP

ISLAMABAD: The industrial sector contributes to around 20.8 percent to the GDP, and is also a major source of tax revenue for the government apart from contributing significantly in creating job opportunities. The Economic Survey 2013-14 shows that the growth of 5.55 percent has been registered in the manufacturing during nine months of current fiscal compared to the growth of 4.53 percent in same period last year. Manufacturing is the most important sub-sector of industrial sector containing 64.92 percent share in the overall industrial sector.  “The government has planned and implemented comprehensive policy measures on fast track to revive the economy, as a result industrial sector started revival and recorded remarkable growth at 5.8 percent as compared to 1.4 percent in last year,” Senator Ishaq Dar, finance minister said. Manufacturing has three sub-components led by Large-Scale Manufacturing (LSM) with share of 52.45 percent, Small Scale Manufacturing with the share of 7.97 percent and slaughtering with the share of 4.49 percent. LSM registered an improved growth of 5.31 percent as compared to the growth of 4.08 percent last year, the economic survey said. During the first nine-month period of 2013-14, LSM posted a growth of 4.3 percent as compared to growth of 3.5 percent during the same period last year. The economic survey has added that during July-March 2013-14 positive growth of LSM was witnessed in fertilisers sector at 21.64 percent, leather products 12.96 percent, Rubber Products 9.48 percent, Paper & Board 8.03 percent, Food Beverages & Tobacco 7.78 percent, Coke & Petroleum Products 7.48 percent, Chemicals 6.71 percent, Iron and Steel Products 3.38 percent, Electronics 2.91 percent, Textile 1.44 percent and Non metallic mineral Products 0.15 percent. However, some sectors that recorded negative growth are engineering products 21.40, Wood products 8.91 percent, Pharmaceuticals 0.49 percent and Automobiles 0.01 percent. While the share of construction in industrial sector is 11.48 percent – one of the potential components of industries, and construction sector has registered a growth of 11.31 percent against the negative growth of 1.68 percent last year. “This is also highest growth level achieved since 2008-09,” the economic survey has said. Electricity generation & distribution and gas distribution is the most essential component of industrial sector. This sub-sector has registered growth at 3.72 percent compared to negative growth of 16.33 percent in last year. The small-scale manufacturing witnessed growth at 8.35 percent against the growth of 8.28 percent last year and slaughtering growth is recorded at 3.51 percent as compared to 3.60 percent last year. Mining and quarrying sub-sector contains 14.45 percent share of the industrial sector. This sub-sector witnessed a growth of 4.43 percent as compared to 3.84 percent growth of last year.