John Singleton with Bob HowardRip Van Australia (Stanmore: Cassell Australia, 1977), pp. 241-44, under the heading “Taxation”.

If, fifty years ago, the government had approached our grandparents (or parents) and said: “We’ve got this fantastic new idea. It’s called modern government. We’re going to provide you with education, health care, welfare benefits, economic planning, etc., etc., and in exchange you have to give us half of everything you earn,” what do you think you’re grandparents (or parents) would have done? The odds are they wouldn’t have been too pleased. Imagine it — half of your weekly salary going in taxes! That’s a pretty high price to pay. But that is what the average Australian pays today.

At the time of writing we only have figures for 1974-75. Consider the following general situation:

Total workforce (civilian): 5.94 million
Average male wage: $148.40 per week
Total government tax receipts (all types): $18,810 million
Average tax per person in workforce: $18,810/5.94 = $3,170 a year = $61 per week.

Thus, the average worker, on these figures, paid $61 a week in tax out of $148 or, 41.2 per cent of his weekly salary. Several other factors put the amount paid over 50 per cent. Inflation, for example, for the last few years has been over 10 per cent, and, as we have seen, is a hidden tax. The average wage of both male and female workers, and juniors, would be considerably less than $148 per week. One third of the workforce, approximately, are female for example. Finally, since 1974-75, inflation has pushed the average wage higher, and into higher tax brackets, so the percentage tax would have increased. We believe, therefore, that it is a conservative, if rough, estimate to say that at least half of the average salary goes in tax.

It is important to remember, here, that in the final analysis, individuals pay all taxes. All taxes on businesses, for example, are either passed on to consumers through higher prices, or to owners or shareholders through decreased profits. All indirect taxes, such as customs, excise, duties, sales tax, payroll tax, licence fees, are passed on in increased prices. It is almost impossible to calculate the exact tax component in the prices of individual items. In mid 1975, for example, the following situation existed with top line cigarettes:

Cigarette: Benson and Hedges Special Filter 20’s
Wholesale price: 20 cents
Retailer’s margin: 11 cents
Excise and import duty: 33 cents
Total retail price: 64 cents

And that’s only half the story. Out of each of the twenty cents wholesale price and eleven cents retail margin a number of other taxes are paid: company tax on profits (42.5%), tax on company dividends, if any, employee income tax and payroll tax, transport taxes, fuel taxes, licence fees, primary production taxes, sales tax, and so on.

At the same time (mid 1975), buyers paid $3.98 in direct taxes on a $6.98 bottle of Scotch whisky; nineteen cents on a large bottle of beer, forty-three cents out of eighty-six cents on a 50 g packet of Log Cabin Tobacco; $1062 out of $3867 on a Toyota Corolla and $1094 out of $6431 on a Toyota Crown (sales tax and customs duty alone). On electrical goods and cosmetics, for example, sales tax is usually 25.5 per cent, and customs duty 35-45 per cent of the wholesale price.

Australians last year (1975-76) paid a total of $21,274,000,000 in taxes; of that $9213 million was individual income tax; $1044 million was customs duty; $2331 million was excise duty; $1408 million was sales tax; $1182 million was a payroll tax; $2600 million was company tax; $201 million was land tax; $838 million was local government rates; $342 million was gambling taxes; $551 million was motor vehicle taxes and $549 million was stamp duties not elsewhere included. They’re just some of the taxes.1

A casual glance through the Australian Year Book can yield some interesting odds and ends, even though they are always years out of date. In 1972-73, for example, we paid $845,000 excise duty on cigarette papers; $2,667,000 excise duty on matches and $148,000 excise duty on playing cards. (They don’t miss much do they?)

The Sales Tax (Exemptions and Classifications) Act 1935-1967 contains some forty-six pages of items affected by sales tax, covering a range stretching from “Allenbury’s Malted Rusks for Infants” through raffia to heavy machinery. Customs duties are levied in accordance with the twenty-one Brussels Tariff Divisions, covering a range from animals, to jewellery, to textiles, to vehicles, to works of art. After you fight your way through the maze of Federal, State and local taxes, fees and charges, you can be excused for wondering whether there is anything that isn’t taxed!

Little wonder governments have tended to resort more and more to the printing presses in order to finance their spending. They have almost reached the limit of taxation.

One of the worst features of all of this is that the taxes probably fall hardest on those who can least afford them. It isn’t the rich that pay them — they can afford to hire smart accountants and set up all the legal dodges. The average family of husband, wife and a couple of children, who drink, smoke, own a car and house, play the pokies, bet on the horses and dogs, own a TV, radio, washing machine and the other usual electrical appliances, have a relative die every now and then, eat food and go out to the movies every now and then, would get hit with just about every tax in the book — income, estate, payroll, sales, excise, customs, property, gambling, liquor, licences, motor vehicle, primary production, services and rates. They don’t have any of the fancy dodges. Any money they manage to save is usually in the bank, building society, or credit union where, in recent years, it hasn’t even earned enough to cover what it lost through inflation. The final irony of it all is that the reason this family is taxed so heavily is to pay for all the benefits it’s supposed to receive.

Do you think what you receive from the government is worth over half of your salary each week? The battle cry of the American Revolution in 1776 was “No taxation without representation”. If they could have seen what taxation is like with representation, they might not have bothered!

In addition to the money paid in taxes, we also have to consider other costs. First, there is the fact that this year (1976-77), for example, it will siphon some $30,000,000,000 out of private production into government hands. Experience shows that much of that money could be spent more efficiently by private enterprise to provide most of the services the government use it for. Then there is the fact that much of this tax money is used to obstruct the activity of private production, by paying for the army of bureaucrats who produce the oceans of red tape we have to fight our way through. Finally, there is the cost to private industry and people of the collection of the taxes, and the keeping of records, paper work, and all things necessary for the compilation of tax returns. In all three areas, the costs are enormous. We all pay for it through a standard of living very much lower than it could be for the same amount of work and energy on our part.

The only way out of this lunatic situation is, as we keep stressing, less government, less regulation, and more freedom. That’s the only way. There is no other. Think about it the next time you fill out your tax return.

Footnote
  1. Figures from Quarterly Estimates of National Income and Expenditure June 1976, Australian Bureau of Statistics, Canberra, 1976.