IT’S around this time every year I get a jolting reminder of
how short life is. Yep, tax returns are due on Monday, people. Have you done
yours yet? So while some of you laze about reading newspapers this weekend,
think of me sitting at home sifting through receipts and cursing the Tax Office
for not creating an Apple compatible etax portal. Seriously fellas, get on to
it. If not for me, do it for Steve.
Just so we’re clear, it can make perfect sense to leave
filling out your tax return to the very last minute, as I do. It all depends on
whether you think you’ll get a tax refund or be issued a tax bill. Remember the
time value of money? Give me a dollar today and I can invest it. Give it to me
tomorrow and it’s not worth as much.
So if you think you’ll get a tax bill, leave it to the last
minute. But if you are likely to get a tax refund, you really should have
submitted months ago and had that money sitting in a uBank online savings
account earning 6.51 per cent (payable only if you make regular deposits).
As an economics journalist, I feel a sense of responsibility
to be among the select minority of taxpayers who still persevere each year in
doing their own tax return.
But let’s face it, three in four taxpayers this year will
use a tax agent to do their dirty work for them (and earn an extension on
lodgement). And who could blame them?
According to a review of the Australian tax architecture for
the Ken Henry tax review: “The time and resources individuals devote to
complying with the requirements of the law could be allocated to more
productive or satisfying activities and therefore represent a significant cost
to the economy.” Amen to that.
Estimates put the cost of taxpayer compliance with the tax
system as high as 2.1 per cent of gross domestic product. That’s as much as 12
per cent of tax revenue collected. The complexity of the system contributes to
1.2 to 1.5 million taxpayers every year failing to lodge. A report in 2009 by
the Inspector-General of Taxation found the chances of being penalised are low:
only 98,700 penalties are imposed a year for non-lodgement.
The annual drudgery of tax returns is a missed opportunity
to engage people with where their tax dollars go. A small thank you note on
lodgement would go a long way …
“Thank you, madam, for your completing your annual tax
return. Personal income taxes account for about 45 per cent of total federal
government revenue and assist us greatly in the work that we do. Business chips
in another 20 per cent through the corporate tax rate and another 15 per cent
comes from the GST, so thanks for that too. The rest we get from a bunch of
customs duties, excises on fuel, alcohol, tobacco and some other itty bitty
taxes too small to mention here.
You might be wondering where it all goes. Rest assured we
usually spend every dollar we get (sometimes less, sometimes a bit more). By
far our biggest expense is in welfare payments to individuals and families. Of
every dollar we collect in tax this year, we expect to spend about a third on
social security and welfare. About 16 per cent will be spent on health, 8 per
cent on education and 6 per cent on defence.
We hope you think that’s money well spent. If not, please
alert us at the earliest possible election. Many thanks for your time. Now
please do go sit in the sunshine and read a newspaper.”
