April 16 is tax freedom day!
Pop the champagne corks and break out the Tim Tams, Australia. Today is Tax Freedom Day.
April 16 marks the date for 2018 on which Australians have paid their dues to the government and begin working for their own benefit.
It has taken 106 days for Australians to pay off this year’s annual tax burden. This is the latest Tax Freedom Day since 2008, when we were in the middle of the Great Financial Crisis.
The average Australian has been forced to pay $21,000 for government services at all levels –federal, state and local.
Despite taking 28.7% of the income created by Australians, this level of taxation is still not enough to cover ever rising government expenditures.
This year, Tax Freedom Day falls five days later than it did last year… taxpayers have paid an extra five days burden compared to last year.
Present forecasts indicate little relief for taxpayers in the coming years, with Tax Freedom Day set to be later every year.
With regular government deficits and new entitlements such as the National Disability Scheme, Gonski 2.0 and the latest childcare reforms, we can look forward to working even longer to pay off taxes down the track.
Governments need to arrest the growth of spending and allow ordinary Australians the opportunity to spend their own money as they see fit. Too often governments are forcibly appropriating other people’s money for uncapped spending programs that provide little to no social benefit.
The Government should also investigate reducing the pernicious impact of income tax bracket creep.
The Federal Government’s income tax thresholds remain constant while inflation causes workers’ wages to rise resulting in ever higher average income tax rates for Australian workers.
The process for governments to increase total tax revenues should be made transparent and require Parliamentary approval.
Bracket creep allows governments to raise revenues largely unbeknownst to taxpayers and is one of the major reasons that Tax Freedom Day is being celebrated a little later each year.
Matthew O’Donnell is a Research Fellow in the Economics Program at the Centre for Independent Studies. He has also worked for the Commonwealth Treasury and the Commonwealth Department of Finance and Administration.
