Quote (Fund's Law):
Governments will always do the right thing - after
they have exhausted all other possibilities.
3rd September 1998
Commentary and images copyright Scott Balson, Global Web Builders.
BACKGROUND
Pauline
Hanson's One Nation believes the only way to resolve the inequities,
complexities, disincentives and punishing nature of our taxation system is
to start again.
There is no point tinkering with a tax system that poses a major obstacle to Australia's growth and development and a disincentive to employment and the pursuit of income through wages. Australia's inefficient taxation system has contributed to an ever-declining living standard for pensioners, PAYE taxpayers, self-funded retirees and small business owners - in essence, the majority of Australians. Most of us cannot generally understand our tax laws, and many accountants struggle to keep up to date with changes.
Pauline
Hanson's One Nation has a totally new approach to taxation based on a 2%
Easytax conceived in 1985 and researched over the last 13 years - a product
of Tax Reform Limited.
This revolutionary approach offers a completely fresh start which will ensure all Australians are taxed fairly, multinationals pay their fair share of tax, provide incentive for growth in our economy and improve employment prospects, while also being visible and easy to understand.
To ensure fairness, equality, acceptance and understanding of the 2% Easytax,
Pauline
Hanson's One Nation will consult with all stakeholders including State and
local governments, unions, employer bodies, welfare groups and other interested
parties before the new tax system is introduced and during the transition
period.
TAX SYSTEM
This innovative new tax system will reduce prices of all goods, services and employment costs by removing existing personal income tax, company tax, sales tax, fringe benefits, capital gains tax, provisional tax and withholding tax (1).
The
Commonwealth/State financial relationship will be reviewed and through
consultation with the States, the Commonwealth government will facilitate
the abolition of payroll tax by using the elimination of PAYE tax to offset
the loss of State payroll tax revenue.
A 2% tax is applied to the sale price at each change of ownership of property, goods and services and is the only tax on wages. There are no exemptions or threshholds.
In the case of wages, the employer pays the 2% tax on the take home pay. The current take-home net pay of employees will be preserved at present levels and any pay rises or additional income earned eg overtime, will be taxed at only 2%.
In
the case of business, the 2% tax on gross sales turnover is collected at
the point of sale and in addition, the wages drawn (their nett profit) by
businesses operated by sole traders or partners are taxed at 2% as will
profits distributed to company directors or shareholders - all tax on profits
businesses paid under the old system will be used to reduce the cost of goods
and services and to employ more staff.
In the case of financial investments (including bank interest, annuities
and pensions of self-funded retirees), the 2% tax is collected by the investment
manager at the time investment returns (for example pensions/annuities/interest)
are disbursed to the investor. The 2% tax is paid on derivative transactions
and exchange of property ownership as they occur.
This
will be detailed in the policy document
'Easytax -
Implementation and Examples'.
The 2% tax applies to margins on speculative 'paper' transactions, all financial market transactions and foreign currency loans or trading. Tax on foreign payments when dispersed will be taxable in Australian currency and the 2% tax on foreign payments and receipts will be levied at the point of entry or exit to or from Australia.
In the case of imports, the 2% tax is collected by the importer. In the case of exports, the 2% tax is collected by the exporter.
Changes to the Medicare levy will be detailed in the One Nation Health policy.
The
2% tax does not apply to money deposited in or withdrawn from a bank account.
IMPLEMENTATION
The collector of the 2% tax makes monthly payments to the Taxation Department. Each monthly payment is made within 30 days of the end of the month in which the tax is collected. To enforce compliance, late payments will incur a penalty.
Note: Business is compensated for their work in collecting the tax through no longer paying tax on profits.
Annual tax returns will be limited to a simple single page that will be able to be completed without the assistance of taxation specialists.
Implementation
of the new tax system will be over a three year transition period with the
benefits flowing in the first year, as described in the policy document 'Easytax
- Implementation and Examples'.
REDUCTION IN COST OF GOODS AND SERVICES
The lower cost of property, goods, services and labour will reduce the cost of living for Australians by an average of 17 %. A detailed analysis of price and cost reduction for households is contained in the policy document 'Easytax - Implementation and Examples'.
PAYE tax currently paid by employees will be used, together with savings from other production inputs, to reduce the price of goods and services.
Negotiations
with unions and employers during the transition period will ensure industrial
award wages reflect the new pay scales.
The Commonwealth government will install mechanisms to ensure savings through lower production overheads and input costs are passed on to consumers by way of a reduction in prices for goods and services.
SUPERANNUATION
Existing employers' superannuation contributions will be preserved; employees superannuation accounts will benefit substantially as taxation on entry to and exit from superannuation funds will be reduced to 2%.
REVENUE RAISED AND REQUIRED
The
2% tax will reduce Commonwealth budget outgoings as a result of cost reductions
for all goods and services including the cost of government. In addition
there will be increased economic activity, and a reduction in social security
costs.
It is estimated Commonwealth revenue including that raised by the 2% tax will provide budget surpluses which will enable the elimination over five years of $69 billion of Commonwealth public sector net foreign debt (2).
REDUCTION IN WELFARE RELIANCE
Progressively, as provident funds grow, and self-funding increasingly provides better retirement benefits for aged contributors, older Australians' reliance on government welfare will be reduced to that necessary to provide welfare in special cases only.
Job growth will flow from the lower cost of employment, the stimulation of the Australian economy by the removal of unacceptably high taxation levels and the lower cost of production and day to day overheads.
1. Taxes to be abolished presently raise the revenue shown below:
1997-98 Receipt estimates
| Type of Tax Removed | Au$ billion |
| Direct Tax (PAYE) | 70.17 |
| Company Tax | 18.79 |
| Withholding Tax | 1.16 |
| Superannuation Tax | 2.96 |
| Fringe Benefit Tax | 3.2 |
| Payroll Tax | 8.0 |
| Sales Tax | 14.09 |
| Total: | Au$118.37 billion |
Most of the funds made available by abolishing these taxes will be applied to directly reduce the price of all goods and services. The remainder will provide other benefits to the community and to assist business to increase production and create new employment.
| 1998-99 | 1999-00 | 2000-01 | 2001-02 | |
| 2% Tax System adjusted revenue | Au$105 billion | Au$89 billion | Au$81 billion | Au$83 billion |
| 2% Tax System adjusted outlays | Au$102 billion | Au$87 billion | Au$71 billion | Au$65 billion |
| 2% Tax System budget surplus | Au$3 billion | Au$2 billion | Au$10 billion | Au$18 billion |