Opinions on the Australian Taxation System - Case Study Example

Name: Institution: Tutor: Date: PART ONE Introduction Australia’s taxation system is known to be one of the most complex globally, having nearly 125 taxes including taxes such as Fringe Benefits Tax, Income Tax, Capital Gains Tax, Goods and Services Taxes among others. The system is developed in such a way that it fits the life of all the Australian taxpayers. For instance, they pay taxes on their incomes, pay taxes when they buy goods and even whenever they sell their assets. This particular paper intends to review various Australian newspapers; the Sunday Times, West Australian, the Australian, the Financial Review as well as various others articles on Australian Tax. From the viewpoint of an outsider, one can learn a lot about the Australian taxation system and recognize the fact there is much opinion that the intensity of Australian tax complexity is currently excessive. The various Australian newspapers; the Sunday Times, West Australian, the Australian, the Financial Review as well as various others articles on Australian Tax, indicates evidence of widespread concurrence on this particular matter, asserting that tax complexity is most likely to go above a level that is viewed to be most favourable for the society in general. Generally, as highlighted by Walsh (2013, Pp 11), taxation is normally viewed as means of collectively affording what cannot be afforded individually. As individuals, their priorities vary, and so too is their perspectives regarding projects that need tax funding as well as their opinion of taxation fairness. Therefore, fairness with regards to taxation remains a vexing question as it seems to more often than not ask the question on fairness with respect to individual perceptions; community needs; comparative contributions from various sources; and alternate systems of taxation along with their applicability. Walsh (2013), in his Australian Financial Review article argues therefore that stable rules ought to be provide to the people so that they can understand as well as have a comprehensible process that gives clarity on areas dealing with taxation and which are perceived as grey areas. This creates an impression of fairness, as a result, enabling a good platform from which individuals can invest. On the other hand, in view of King & Walsh (2013,Pp 37) position, the perfect “welfarist” analysis of taxation complexity would evaluate the impact of any given aspect of a taxation system or a projected change by basing it on the effect it will have on all the members of a society. If every person is contented, then the aspect of the tax system is worth adopting. On the other hand, if as is to be expected, there are losers and winners from a particular policy change, then social justice standards ought to be applied to determine whether the adopted change is considered necessary. In general, and based on the opinions of the various Australian newspapers; the Sunday Times, West Australian, the Australian, the Financial Review as well as various others articles on Australian Tax, it is evident that they have shed some light as regards the standard by which the Australian taxation complexity ought to be assessed. In so doing, it is more likely that the considerations of consistent standards are bound to inform the Australian policy debate about tax complexity. PART TWO Opinions on the Australian Taxation System As highlighted by Murphy (2004, Pp 12), a number of studies have revealed that various individuals have different feelings and beliefs as regards their respective taxation systems. Australians are no exception to this. These beliefs and attitudes, however, are argued to affect the taxpayers’ propensity to evade tax submissions. Based on my own findings from the Australian newspapers and other research, I would argue that a number people have a feeling that the Australian taxation system is not efficient. My reasoning is based on the fact Australian Taxation Office has not been able to fully execute initiatives that would be able to combat aggressive tax planning. In my opinion, a number of people posing their opinions regarding the Australian taxation system believe that an ideal taxation system ought to be one in which all the taxpayers willingly submit their taxes in addition to complying with all their tax obligations willingly. However, this is not true with the case of Australian taxation system. On the contrary, a number of the Australian tax payers seem to have come up with strategies that involve non-compliant activities that can most appropriately be termed as tax evasion, for instance, inventing false expenses. A significant example is one revealed by Stensholt (2013,Pp 4) on the Australian Financial Review whereby Nathan Tinkler had issues with submitting taxes and the matter taken to the Federal court in Sidney for hearing. Another strategy that some Australians are adopting in order to evade paying taxes is by exploiting uncertainty in Australian laws. According to Murphy (2004, Pp 1), aggressive tax arrangement used was many years ago a secret that was well kept by high-priced accountants and tax lawyers; as a result, it was only reserved for very wealthy people. However, this has recently changed as thousands of ordinary Australians have been employing it to evade tax payments, a factor that generally puts into question the efficiency of the Australian tax system. Australasian Business Intelligence (2002), however, highlights that according to the Australian Tax Office, a number of Australians evading paying taxes by exploiting uncertainty in Australian laws are merely exploiting loopholes within the Australian tax laws which were merely designed in a way that would allow one to avoid paying taxes. According to Walsh (2013,Pp 40),the practices of tax avoidance are mainly done by wealthy investors who used it as means through which they were able to legally minimize the taxes that they were required to submit while still carrying out other viable long-term investments. In view of the above, it can be argued the Australian tax system is not efficient. With respect to the Australian tax system, there is also specific evidence from various individuals suggesting that the Australian taxation system is unfair. As highlighted by Salt (2013,Pp 1), one position of the general Australian society is that all the employees work relatively equally, however, due to the institutionalized advantages as well as disadvantages not everybody is rewarded equally. In consequence, Australia has tried working on developing a progressive tax scale that reflects logic, for instance, taxing the rich along with in special charges as well as other imposts that have been rarely applied. Their perception of the Australian taxation system as unfair is argued to be affecting their opinion regarding paying taxes and more so affecting their compliance decisions. As highlighted by Murphy (2004, PP 4) tax fairness appears to be involving at least two diverse aspects. The first aspect relates to the gains an individual accrues from the taxes paid. The second aspect relates to the perceived fairness of a taxpayer’s burden compared to that of the other individuals. Murphy (2004, PP4) further states that the second aspect relates to the taxpayers’ view of vertical equity of the taxation system. For instance, if an individual paying taxes were to consider that they were submitting more inform of taxes than the fair share when compared to the affluent taxpayers,(that is perceived as vertical inequality)then they likely to perceive paying taxes as a burden rather than tax payers who are not concerned with these issues. As a consequence of the perceived unfairness of the Australian taxation system, Australia has tried working on developing a progressive tax scale that reflects logic, for instance, taxing the rich along with in special charges as well as other imposts that have been rarely applied. The progressive tax scale is being developed based on moral obligation grounds such that those who earn a lot can help those earning low salaries, therefore an income transfer system from the affluent to the poor. According to Creighton (2013, Pp 1), other people are also of the opinion that the Australian tax system is proficient. Their opinions regarding the system are guided by the fact that the Australian taxation system is argued to be among the most progressive globally. Creighton (2013) argues that the Australia’s tax system is one of the most efficient worldwide, having highest top marginal rates at approximately 46.5%.Additionally, their opinions regarding the system are also guided by separate statistics from the Australian Bureau of Statistics confirming that only the top fifth of the tax paying family units are major contributors to the vast as well as complex government apparatus of Australia. On the other hand, according to Creighton (2013,Pp 1), lower income earners have often disagreed with the above opinions arguing that the super tax recognition ought not to be used to argue Australian’s taxation system to be efficient. Opinions coming from a number of people are also that the Australia’s taxation system is less generous to super savers. According to a study carried out by Mercer (a famous consulting group),six out of the eight most highly developed nations of the globe have taxation systems that are argued to be kinder to their retirees than that of Australia. According to Main (2013), Mercer observed that whereas there are significant variations between nations in terms of their retirement systems, particularly with regards to how much retirement gains was offered directly by their respective governments, the only two nations with benefits that were lower than Australia included Sweden and Denmark, and both the nations spent more on retirement fund than Australia. The research confirmed that six nations-the US, the Netherlands, Canada, Switzerland, Chille and the UK had tax regimes that seemed more generous towards their retirees than Australia. The nine nations assessed are generally the ones perceived to be having the best retirement systems. Main (2013) highlights further that Australia is the only nation out of the nine that charges tax rates on worker contributions, at 15%, as well as the only nation that does not offer tax deductible contributions. Additionally, it is also one of the three assesses nations having a tax rate on business/investment income. The move according to Main (2013) is carried out by the Federal government as a way of increasing tax burden on super savers so as to fill the hole in its budget, citing tax concessions that were given to tax payers in the past years. Australian tax system is thus perceived by some individuals to be less generous to the retirement savers. Conclusion From the above analysis, what is evident is the fact that Australia’s taxation system continues to experience unending twists and turns. It is also clearly evident that taxpayers have different feelings and beliefs as regards their respective taxation systems. The beliefs and feelings towards their opinions as highlighted by the above analysis seem to be guided by a number of factors including the gains accrued from the taxes paid; the perceived fairness of a taxpayer’s burden in relation to that of the other taxpayer and the taxation system’s efficiency. . Reference Australasian Business Intelligence. There’s no avoiding it ... Foreign Tax Havens the Trendy Scam, The Australian, 2002, Pp 1, Retrieved on April 18, 2013 from Creighton, A. Gillard’s Super Tax Concessions Argument a Bit rich, The Australian, 2013, Pp 1, Retrieved on April 18, 2013 from Murphy, Kristina. An Examination of Taxpayers’ Attitudes towards the Australian Tax System: Findings from a Survey of Tax Scheme Investors, Australian National University, 2004, Pp 1-12, Retrieved on April 18, 2013 from Main, Andrew, Australia’s Tax System Less Generous to Super Savers, Mercer Reports, the Australian, 2013, Pp1,Retrieved on April 18,2013 from < http://www.theaustralian.com.au/business/wealth/australias-tax-system-less-generous-to-super-savers-mercer-reports/story-e6frgac6-1226575523158> King, Agnes & Walsh, Katie. PwC in the spotlight over tax scheme, The Australian Financial Review, Fairfax Media Management Pty Limited, 2013, Pp 37 Stensholt, John, 2013, Tinkler Tax still at Issue, The Australian Financial Review, Fairfax Media Management Pty Limited, 2013, Pp 4 Salt, Bernard, 2013, Changing Tax System Causes High-Income Earners to Revolt, The Australian, 2013, Pp 1, Retrieved on April 18,2013 from Walsh, Katie.ATO Changes to Bring Clarity and Boost Confidence, The Australian Financial Review, Fairfax Management Pty Limited, 2013, Pp 11 Walsh, Katie.Jordan to Set up Independent Tax Appeals, The Australian Financial Review, Fairfax Management Pty Limited, 2013, Pp 1 Walsh, Katie, Transfer Pricing Reform a Fee Fizzler, The Australian Financial Review, Fairfax Media Management Pty Limited, 2013, Pp 40 Read More