Real Tax Reform
By Michelle Lopert
It’s the 21st Century and we’re still paying Income Tax. This archaic system was devised back in the Industrial Revolution. Today, with the advent of computers, there are simpler, better, and more equitable ways to collect taxes.
Most governments are continually looking for new sources of tax revenue that are not politically suicidal. Obviously, the money raised through income tax isn’t enough so we now have GST, payroll tax, property rates, fuel excise, stamp duty, capital gains tax, land tax, company tax and more. Ironically, the wealthier you are, or the bigger your corporation, the more chance you have of avoiding tax through tax havens, Swiss bank accounts and creative accountancy.
A viable alternative to all these ridiculous complex taxes is to replace them with one tax - the DEBIT TAX. The National Debit Tax is the most efficient system of taxation ever devised. And it’s not new. The Debit Tax has been working successfully in Norfolk Island where there is no income tax.
Here’s how it works. Every hour of the day, money is withdrawn from savings accounts, cheque accounts, insurance companies, business and investment organisations, and financial institutions of all kinds.
Whenever a person, financial institution, or company withdraws money by cash, cheque or electronically, a 1% tax is automatically debited. That 1% is then electronically transferred to the Australian Federal Treasury.
The tax is collected electronically and continuously – not quarterly or annually – and without paperwork of any kind. You don’t have to do a thing.
Let’s say you have an annual salary of $30,000. With today’s cumbersome system, if you add up all the taxes including income tax, GST, house rates, fuel excise and other hidden taxes, you’ll be paying about $15,000 tax. Under the debit tax system, you would only pay $300.
On a national level, a 1% debit tax would provide Australia with a tax revenue of approx $470 billion annually. The current system only provides approx $215 billion.
It’s hard to believe that a tiny 1% national debit tax could replace all other taxes at the Federal, State and Local Government levels.
Unlike all other taxation systems, the National Debit Tax does not require you or any business or organization to give an account of transactions to the Government. Big brother will not be watching because it’s not necessary.
Tax collection becomes the function of a programmed computer linked to the banking system under the control of the Treasury Department.
Individuals, businesses, and corporations will no longer be required to be self tax collectors as they are today. This eliminates potential sources of injustice, corruption and tax evasion. Why would a company bother hiding money in tax havens that charge 2 or 3% when the Debit Tax is only 1%?
Imagine, we could eliminate the bureaucratic nightmare known as the Taxation Department, emancipating the thousands of glassy-eyed administrative slaves who sweat over mountains of income tax forms, deciphering a million petty laws.
The debit tax would erode the cash economy. With Big Brother not watching, who is going to risk keeping millions under the mattress in order to avoid a piddling amount of tax?
Likewise, the debit tax would see the demise of destabilising currency speculation. The debit tax would eat away the profits of speculators who move massive amounts of money around the globe in a bid to cash in on small currency fluctuations.
What company would complain about a 1% debit tax when it means not having to pay 3.75 % payroll tax?
After the Global Financial Crisis, leaders of Europe's three biggest economies, Germany, France and Britain, were promoting the Debit Tax as a way to fulfil commitments to domestic budgets, climate change and international development. Regrettably, our federal Treasurer, Wayne Swan, did not support the tax at the G20 finance meeting in 2009 possibly because Australia came through the global financial crisis relatively unscathed. But how will we fare in future crises?
They say the only certain things in life are Death and Taxes. The tedious Tax Pack booklet may be a great cure for insomnia but let’s make it a relic. Let’s push for proper tax reform and stop fiddling at the edges while Australia burns...or, should I say, floods.
(Reprinted with permission - Thank you, Michelle!).
