Per Capita is a small progressive thing tank run by former LEK consultant, David Hetherington. Today it released a new study of Australian attitudes towards the tax system. Hetherington says:
The Per Capita Tax Survey for 2011 has asked 1,300 Australians for their views on personal tax contributions, overall taxation levels, public service spending and new tax proposals such as the Minerals Resource Rent Tax and the carbon tax. Whereas much tax commentary is highly technical and driven by representatives of assorted interest groups, this Survey captures public attitudes towards tax and government spending, shining a light on citizens’ view of their own tax system.
The results demonstrate both continuity and change over the last twelve months. Australians continue to desire a more progressive tax system which sees higher income earners and big business making a greater contribution. As in 2010, we find that citizens want governments to spend much more on public services. We see a repeat of the two forms of cognitive dissonance observed last year. First, individuals want more spending on public services, but believe they personally should pay less tax. And secondly, many high-income individuals believe that the wealthy should pay more tax, but feel that their own tax levels are too high, despite the fact that on any objective measure, they are themselves wealthy.
There are also shifts in community sentiment since last year: attitudes towards tax have become less generous. More people believe they pay too much tax, particularly those nearing retirement age, and more say that high-income earners and big business pay too little tax. While still high, support for spending on public services has fallen considerably.
We also surveyed attitudes towards the proposed new taxes on mining and carbon emissions. A majority of respondents support a mining super-profits tax, and supporters of an emissions trading scheme outnumber supporters of a carbon tax by two to one. There is a distinct split between younger and older respondents, as younger people discount the future at a lower rate: they are more likely to support both the mining tax and carbon pricing.
Finally, we asked about Australia’s tax levels relative to peer countries and found considerable ignorance around Australia’s comparative tax levels. Most respondents believe that Australia is a high-taxing, big government country when in fact its tax-to-GDP ratio falls within the lowest 20% of the OECD.
Readers will not be surprised to find that the most interesting result to me is the attitude shift in favour of the MRRT.
The first big tax proposal has been the minerals resource rent tax (formerly the mining super-profits tax). When asked for their opinions on this proposal, an absolute majority of respondents (52%) said they supported the tax. About half this number opposed the tax (27%), with the remainder unsure.
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The Age reports this morning that this is a big attitude shift from last year:
About 49 per cent of Australians were opposed to the idea of a mining ”super profits” tax when it was announced last year, according to an Age/Nielsen poll taken last June.
By no means are we looking at exhaustive evidence here. Nonetheless, I think it likely that this attitude shift is real. After twelve months of raging Dutch disease, you’d have to be living under a rock not to have been exposed to the negative impacts on the dollar and interest rates.
Kudos to Per Capita for posing this question. Sadly, however, it has been structured in a limited and somewhat confusing way. Asking folks “Do you agree with the Australian government’s intention to place a Mineral Resource Rent Tax on the “super” profits earned by mining companies?” confuses the MRRT and the RSPT. I’m not sure whether respondents are responding to the taxing of “super” profits or to the MRRT legislation. The two are practically and rhetorically very different. This leaves us with little to go for the future beyond a general sympathy with the notion that taxing mining profits is becoming a more acceptable notion in the community.
It would have been more useful to split the RSPT and the mangy dog that is the MRRT and ask questions about both. That would have given us a much better guide to how far community attitudes have shifted and how far the tax can be pushed in the future.
Still, there was some demographic assessment. First, by income:
When these results are analysed by income, we see that for an MRRT is stronger in the middle income bracketsand weakest in the lowest and highest income brackets. In all income bands from $20,000 to $150,000, support-ers of an MRRT outnumber opponents by a factor of around two to one. While support is noticeably lower below$20,000 and above $150,000, at 46% and 48% respectively, support amongst these households still outweighsopposition by at least 13 percentage points.
This pattern is mirrored in the breakdown of responses by age. The greatest support for an MRRTis in the 35-44 year old age group at 58%, while the weakest support for the MRRT is in the under 18 and over 65age groups with 47% and 49%. Interestingly, above 25 years, opposition to the MRRT increases steadily with age,from 19% in the 25-34 year old bracket to 38% in the over 65 group. This result is unsurprising as we would expectto see a correlation between age and an unwillingness to set aside current income for future consumption.
And next, by state and age:
Surprisingly, the pattern of support by state is not distributed as expected. The conventional wisdom holds that opposition would be highest in the mining states of Queensland and Western Australia, but these states exhibit relatively high levels of support at 52% and 54% respectively, with 27% and 36% opposed. Conversely Victoria, whichone might expect to provide strong backing for an MRRT, is the only state where less than half of respondents support the idea (46%).
The Survey then asks supporters of the MRRT how the Government should spend the proceeds of the tax. 33% of supporters believe the funds should be used to fund everyday public services, while a further32% believe they should be spent on building infrastructure. Just 15% feel the proceeds should be used to fundpersonal income tax cuts, while only 8% say they should be invested in a long-term national savings fund.
This is the kind of research that the non-existent non-resource exporters lobby should be pumping out every single day. Blind Freddy can see there’s a rising consciousness of the downsides of the mining boom. When are other exports going to wake up to it?
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
