By Andrew Mackinnon
Last updated: 3rd January, 2022
The Goods & Services Tax (GST) in Australia is double taxation of income on which income tax has already been paid. The government wasn’t satisfied with the income tax that citizens paid on their earnings. It wanted more. So, on 1st July, 2000, it introduced the GST to tax the income that the citizenry have left after they’ve already paid income tax. This is an attack on the property rights of the citizenry over the income that they earn. The citizenry earn income and are obligated to pay income tax to the government to fund their common needs. One would hope that they have property rights over their remaining income, but no! The government wants more and the citizenry are on the hook for 1/11 in GST of all of the goods and services they purchase with their after-tax income.
Life is too short for tawdry complexity, such as multiple taxes on the citizenry – income tax, GST, CGT (Capital Gains Tax), company tax and fuel tax. The only tax should be income tax.
Capital gains tax is in direct opposition to property rights and should be abolished. With capital gains tax in force, if somebody saves up some money and then invests it in shares (or any asset for that matter), they quite obviously don’t have full property rights to it because if they later sell it for more than they paid for it, the government wants a cut of the gain via capital gains tax. If they have full property rights to it, they could sell it and keep the full amount they receive for it without paying any capital gains tax.
All taxes on the profits of businesses should be abolished. There should be no taxes on the profits of businesses (i.e. sole traders, partnerships, companies, corporations et cetera), which are distributed to the citizens who own the businesses (i.e. proprietors, partners, shareholders et cetera) as income of those citizens. That income should then be subject to income tax. This means that the profits of businesses, which are distributed to the citizens who own the businesses, are only taxed once as income of the citizens who own the businesses.
Fuel tax should be abolished. Everybody in society benefits from roads and the transport of goods that they make possible, including those who don’t drive motor vehicles, so roads should be paid for out of income tax. Just like the GST, fuel tax is double taxation of income since it’s paid for by the citizenry out of their after-tax income.
Who wants to work more than one day out of five to support the needs of the nation via income taxation? It’s not necessary. There should be a flat rate of income taxation of no more than 20% on all income earned. The tax-free threshold which exempts all income below the threshold from income tax should be abolished.
If anybody wonders how we could possibly fund our common needs with a flat rate of income tax of 20% on all income, I’ll tell you. Don’t provide the entities responsible for delivering government projects with super profits, such as the $50 billion that the federal government committed for a fleet of twelve submarines earlier this year. Start looking at the largest amounts to find waste in government spending and work your way down – all the way down. Government spending could easily be reduced by 60% with no reduction in the quality of government services provided.
We don’t need state and territorial governments in Australia. We only need federal government and local government. The state and territorial governments of Australia should be abolished so that there is only federal government and local government in Australia.
The states and territories should be retained as geographic entities in order to minimise the disruption resulting from the abolishment of state and territorial governments and to facilitate federal governmental administration.
The existence of state and territorial governments in Australia is an obstacle that prevents the federal government and local government in Australia from operating effectively and efficiently in the best interests of Australian citizens.
For example, it would be preferable if there was only one property titles system covering the entirety of Australia, administered by the federal government, instead of a separate property titles system for each state and territory in Australia, administered by each state and territorial government.
The federal government of Australia should be physically relocated from the Australian Capital Territory to a local government area in a warmer location somewhere between the north of New South Wales and the south of Queensland inclusive, so that the responsibilities of federal government can be discharged effectively and efficiently all year round.
The government of the Australian Capital Territory should be abolished. The geographic entity of the Australian Capital Territory should also be abolished and divided into one or more local government areas belonging to New South Wales.
Banking, water, electricity, gas, telecommunications and the postal service should all be publicly-owned, should all operate on a not-for-profit basis and should all be charged to end-user Australian citizens and end-user Australian entities at cost, so that no income tax would be required to fund the operating costs of these essential services.
In the case of banking, no interest would be charged on lending for any purpose, however a rate of less than 1% would be required on all lending to cover the incidence of borrowers defaulting on loans. The operating costs of what would be the “Australian Bank” would be covered by charging transaction fees and account-keeping fees, which would be restricted to the actual costs incurred by the bank to process the transactions of Australian citizens and Australian entities and to administer the accounts of Australian citizens and Australian entities.
The method that should be used to increase and decrease the size of the money supply in Australia is increasing and decreasing the amount of principal that the banks are allowed to lend to Australian citizens, Australian businesses (such as sole traders, partnerships and companies) and Australian not-for-profit entities (such as churches) for different types of loans, expressed as a multiples of the incomes of Australian citizens, multiples of the profits of Australian businesses (such as sole traders, partnerships and companies) and multiples of the operating surpluses of Australian not-for-profit entities (such as churches). These multiples should be different for different types of lending, such as mortgages, personal loans, credit cards, business loans to sole traders, partnerships and companies and loans to not-for profit entities.
All public schools (i.e. public primary schools and public secondary schools), TAFE (Technical And Further Education) colleges and universities should be brought under the public ownership of federal entities named “Australian Schools”, “Australian TAFE” and “Australian Universities”.
All public schools, TAFE colleges and universities in Australia should be funded by income tax. The parents of the students of public schools, the students of TAFE colleges and the students of universities should not pay for their use of public schools, TAFE colleges and universities, unless they are repeating units of study at TAFE colleges or universities due to failure in those units of study or pursuing postgraduate qualifications at universities, in which case they should pay half of the cost of their use of TAFE colleges or universities in relation to those units of study at TAFE colleges or universities that they are repeating or those postgraduate qualifications at universities that they are pursuing.
All public hospitals should be brought under the public ownership and control of a federal entity named “Australian Hospitals”.
All public hospitals in Australia should be funded by income tax. The patients of public hospitals should not pay for their use of public hospitals.
Other government services like the legal system, the police force and the defence force would be funded via income tax.
Following is a non-exhaustive list of government services, together with their sources of funding:
> Local government – Local government rates
> Local waste and recycling collection – Local government rates
> Local roads – Local government rates
> Local parks – Local government rates
> Australian Bank (Currently privatised) – User pays – Transaction fees and account-keeping fees
> Australian Water & Sewerage – User pays – Water bill
> Australian Electricity (Currently privatised) – User pays – Electricity bill
> Australian Gas (Currently privatised) – User pays – Gas bill
> Australian Telecommunications (Currently privatised) – User pays – Telecommunications bill
> Australian Post – User pays – Postage cost
> Australian Ports (Currently privatised) – User pays – ?
> Australian Motor Vehicles – User pays – Motor vehicle registration
> Australian Maritime Vessels – User pays – Maritime vessel registration
> Australian Railways – User pays – Ticket cost
> Australian Buses – User pays – Ticket cost
> Australian Airports (Currently privatised) – User pays – ?
> Australian National Parks – User pays – Entry cost
> Australian Parliament – Income tax
> Australian Treasury – Income tax
> Australian Courts – Income tax
> Australian Police – Income tax
> Australian Prisons – Income tax
> Australian Roads – Income tax
> Australian Fire – Income tax
> Australian Customs – Income tax
> Australian Hospitals – Income tax
> Australian Schools – Income tax
> Australian TAFE (Technical And Further Education) – Income tax
> Australian Universities – Income tax
> Australian Welfare – Pensions – Income tax
> Australian Welfare – Unemployment Benefits – Income tax
> Australian Defence (including border patrol) – Income tax
> Australian State (i.e. external relations) – Income tax
> Australian Trade – Income tax
> Australian Immigration – Income tax
Assuming that the Australian federal government takes on any debt owed by the Australian state and territorial governments after they have been abolished, any debt that the Australian federal, state and territorial governments owe to the Reserve Bank of Australia is void and does not need to be repaid if the Reserve Bank of Australia created money out of nothing and lent it to the Australian federal, state and territorial governments in order to create this debt. It is important to ascertain how large this debt is that the Australian federal, state and territorial governments owe to the Reserve Bank of Australia.
Assuming that the Australian federal government takes on any debt owed by the Australian state and territorial governments after they have been abolished, the only way I can think of paying off the remaining debt that the Australian federal, state and territorial governments owe to bondholders, which is likely enormous in size, is “monetising the debt”, whereby the Australian federal government simply creates the money needed to pay it off. I believe that this remaining debt, like all Australian federal, state and territorial government debt, is a trap which has been deliberately set for Australian citizens over the past three decades and longer. Perhaps this monetisation could occur in many stages to stagger its inflationary effect due to the associated increase in the money supply. The Australian Bank could create money out of nothing amounting to about 15% of the remaining debt each year for about 10 years in order to repay the principal of this remaining debt and in order to pay the interest obligations that are attached to it. It is important to ascertain how large this remaining debt is that the Australian federal, state and territorial governments owe to bondholders.
Economic policy in Australia has been dysfunctional for decades – driven by opportunistic expediency instead of sound reasoning governed by biblical principles. Nevertheless, it’s not too late to fix the desperate mess this country is in.