There appears to be a feeling amongst Australians that we are taxed far too much and that our tax rates do not allow enough reward for effort and encouragement to increase our incomes. Is this really right?
There is more than enough economic data released around the world showing that our tax rates are significantly higher than most western countries. At the same time, data also shows our social security benefits are far more generous than most. Does this simply mean we do a better job as a nation of sharing the wealth of the nation across the whole community? If so, it has to be funded through tax revenues are our higher rates really such a bad thing?
We saw during the GFC that our traditionally higher lending interest rates meant there was more room for the Reserve Bank to move to ensure we missed the worst of it. Afterall, we aren’t in the position so many larger countries are. Example include the US, France, Greece, Italy, Spain.
Nobody with a mortgage likes high interest rates but higher interest rates are good for those with savings (such as retirees, particularly those who are self-funded). Is it really such a bad thing? Depends on your personal circumstances how you are more likely to see it.
News out of France over the weekend is that there are plans to put in place a new tax on earnings over $1,000,000 euros of 75% as a means to sure up government revenue. Supporters say it is only fair that those on extremely large incomes should contribute the more. Opponents say it will drive big business and investment away from France which will cause wide ranging problems in the long-term. The British Government has made it clear they will work with any French firm wanting to move to Britian as a result of the new tax.
Perhaps having traditionally higher taxes and interest rates than most of the rest of the world isn’t such a bad thing afterall? Kind of makes you think, doesn’t it.