Your Future in Your Hands:Total Tax Reform
by John McRobert
Brisbane: Copyright Publishing Co. Pty. Ltd., 1998, pp. 178.
As Australia flounders more and more under the legacies of Mr. Peter Costello, and the demands of governments for revenue rise, not only in Australia, but in the majority of other countries, pressure for more efficient and less burdensome tax systems increase.
"Your Future in Your Hands" provides an important analysis of an alternative system which depends broadly on the imposition of tax at a rate of two per cent on a large range of transactions, and the removal of other taxes on income, goods, services and so on. This low rate is presented as practical in view of the large range of transactions to which the new tax would apply. It would, for example, apply to sales of raw materials to a manufacturer, to sales by a wholesaler to a retailer and to sales by a retailer to the public (but not to deposits in or withdrawals from a bank account).
The author points out correctly that a tax of this kind would have many economic benefits, as well as the advantages of simplicity. For example, the cost of labour would be much reduced, since wages could in effect be decreased by the difference between amounts paid to cover high rates of income tax and the much lower rate of two per cent.
Mr. McRobert's view that this new tax regime would increase total employment and increase the competitiveness of Australian labour is certainly correct.
Mr. McRobert is also correct in noting that the new tax system would reduce substantially many classes of government expenditure. Payments made to government employees could be reduced, and other major governmental cost savings would also occur, since virtually everything that is purchased by or supplied to governments has been charged or affected by one or more government taxes, at high rates.
The psychological effects of a tax of this kind would, as the author points out, be extremely favourable. Taxpayers presented with opportunities to work overtime or otherwise to increase their income would not be deterred by the very high marginal tax rates that exist presently. It is indeed difficult not to accept that the new tax system would add greatly to the attractions of Australia as a place in which to live and invest.
"Your Future in Your Hands" is written in a simple style, and is directed primarily at non-experts. It is easy to read and understand, but this is not to suggest that the proposed tax has not been carefully researched. An initial study was carried out by Unisearch, working out of the Queensland University of Technology in Brisbane. Mr. McRobert has set out in the last part of his book some 110 pages of statistics, and throughout the early chapters many arithmetical examples are provided of the way in which the tax would be expected to work.
Few people today are not concerned by the increasing demands of the current tax system. Its complexity is such that even tax experts struggle to understand it. Its increasingly burdensome nature raises the question whether investment and increased activity are worthwhile. Some radical change is required. The tax proposed by Mr. McRobert (which is discussed in an article by Mr. Derek Smith at pages 53 to 59 of this issue of National Observer) merits careful consideration, and his book is strongly recommended.
National Observer No. 45 - Winter 2000