Death and taxes; teabag parties, ‘bogan bonuses’. Tax, it would appear, is a perennial and ubiquitous topic. Often overlooked, though, is the emotional power of tax. We get excited when we get a return, we hate filling in forms and collecting GST. We whinge, we chat, we splurge. In short, we take tax very personally.
Historically, taxation has been the central interface between citizen and the state. Sophisticated ancient empires rested on administrative control and governance through a taxation system; when this decayed, states began to fracture and communities shrank to the horizon of the next hill.
We’re reluctant to see taxation as a shared endeavour – perhaps because it does confront us as isolated individuals with the resources, reach and power of the state. ‘Impost’, ‘levy’, ‘charge’ – the words used tax our brains when we try to see taxation as a nexus, or a link, between us and something bigger than us.
But it is – it’s a hinge.
Australia sits at an interesting juncture. Contrary to social contract theory, in the Antipodes the state came before society. Our nation – and our national belonging – were forged through the active power of colonial and post-colonial rule. Yet we have an ambiguous attitude towards our governments. Collective endeavour across vast distances, yes; but also the individual standing alone under the great Southern sky.
Ironically, perhaps, it was the early defeat of conservative forces and the triumph of a 19th Century radical liberalism on these shores that has left us rather distrustful of a state on which we rely for so much. It’s as if in the vast spaces of our continent, we feel we could escape notice, and thus minimise making our contribution to the Commonwealth. But the degree to which we rely on the state for protection and sustenance leaves us fearful that a toll will be exacted.
It’s this tension between individual self-reliance and a stateless collectivism that haunts debates about the role of government in Australia. Our rulers appear distant to us – there isn’t much sense of democratic interplay. Even the institution of compulsory voting betrays – metaphorically – a suspicion by our betters that we’d really rather just not take any notice. Unless we need them.
I’m painting a very different picture than that of the homogenous societies which can support – culturally and sociologically – a highly redistributive tax regime. We are not, and never will be, ‘Sweden in the South Pacific’. But that doesn’t mean we can’t think about the fiscal hinge between us and the state somewhat differently.
There is a culture, I am suggesting, of and about taxation.
Much ink has been spilled in a longstanding debate about the willingness of citizens to forego tax cuts for investment in services. This is an important question, but reliance on opinion poll evidence distorts its discussion and renders it too partisan. In truth, respondents to surveys are led to an answer. That does not mean the sentiments aren’t real – but rather that they’re nascent. It would take genuine political leadership to forge a consensus, or even a majority or plurality, around a different balance between taxation and public provision.
That leadership has been absent.
This is where The Henry Review becomes interesting.
Australia’s Future Tax System is also something of a hinge – transcending the legacy of the Howard years and pointing towards a new era. But it’s also something of a legacy object itself – conceived and framed before the storm clouds of the Global Financial Crisis rolled over the horizon. It would be an interesting exercise to ponder an alternate universe where the review shaped the world of ‘The First Rudd Government’ – which was only just coming into existence at the time the economic storm broke. We’re now living through Rudd 2.0.
If crisis provides opportunity, then there is an opportunity to shift our taxation cultures right now.
Here, the ‘coming out party’ of Ken Henry is also intriguing. Liberated, perhaps, from the Costello regime, the Treasury Secretary gave an exceptionally suggestive speech on April 4th this year – ‘How much inequity should we allow?’
Belying the rather dry title, Henry confessed some sins and repented of his past skepticism about the distributional as opposed to the processual aspects of the tax system. He sketched a framework drawing on Nobel prize winning development economist Amyarta Sen’s notion of ‘capabilities’:
‘…rights are important and income redistribution worthy, but on their own they are not enough. What is essential to equity is to develop people’s capabilities. The tax-transfer system must be designed with this goal firmly in mind.’
Henry might himself be providing some of the leadership in the tax debate lacking from the politicians.
He gestures towards a new way of imagining ourselves in relation to each other – not the negative freedom discourse of a right to be free of imposts, but also not the elimination of difference implicit in a collectivism that remains purely imaginary in a society such as ours.
But Ken Henry’s vision is not enough. The outcomes of this tax review will be politically shaped. We, seeing ourselves as social actors, need to reimagine ourselves as political participants. Civil society needs to oil its hinge to the bureaucratic and partisan machines. We need to think more of what our shared cultures require of us.
It’s in that light – and in the light of increasing capabilities – that we must reimagine our relation to the state outside the frames of both dependence and resentment which have so far made tax an object of cultural suspicion. Progressive thinkers, too, must recall our capacities as citizens and stop expecting the state to usher in a idyllic polity. We’re all in this together. Death and taxes.
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