Eight charts on our growing tax problem: what abandoning tax reform means for taxpayers


Rebecca Cassells, Curtin University and Alan Duncan, Curtin University

As we move closer to Treasurer Scott Morrison’s third budget, what we do know is this – Australia has a revenue problem. A more global and digital economy; an ageing population with fewer taxpayers and sluggish wage growth make future predictions of revenue even more precarious. There’s never been a better time for tax reform.

But as governments have tried to reform (and stumbled) over the years the burden has shifted to individual taxpayers and the latest budget is likely to be no different.




Read more:
Government spending explained in 10 charts; from Howard to Turnbull


We looked at revenue data over the last 20 years drawing from budget papers, government finance statistics and the Australian Tax Office. To compare revenue over time, we have adjusted for the effect of inflation by using real measures.

Tax revenues have risen 26% in Australia since the global financial crisis, from A$310.3 billion in 2009 to A$389.8 billion by 2016.

Income tax has contributed most to this growth and some is driven by rising wages and jobs growth. Between 2009-10 and 2016-17, individual income tax revenue grew by 37% – an average of 5% each year.

https://datawrapper.dwcdn.net/6474m/7/

But bracket creep also comes into play as personal tax thresholds have not kept pace with inflation, causing average tax rates to rise among middle income earners in particular.

The growth in business tax revenue leading up to the global financial crisis was heroic – averaging 11% each year and well above any budget forecasts. In the ten years to 2007, business tax revenue grew by almost 130% – from A$41.4 billion to almost A$95 billion.

https://datawrapper.dwcdn.net/aIP16/4/

But what goes up must come down, and business tax fell by 6.3% between 2008 and 2016. However we can see strong growth between the last two periods, with business tax receipts growing by 10.7% from A$72.6 billion to A$80.3 billion.

Revenues from GST and sales taxes have risen, by 16% since 2009.

https://datawrapper.dwcdn.net/zOSNh/8/

The relationship between Australia’s economic output and its tax revenue looks somewhat different. The tax-to-GDP ratio reached nearly 25% prior to the global financial crisis, but dropped to 20.5% in 2010-11. It recovered to around 22% by 2012 and has remained essentially flat since then.

https://datawrapper.dwcdn.net/8pwOk/7/

A history of reform attempts

Successive governments have attempted to create an efficient tax system that’s fair and reliable with few distortions. Prior to the turn of the century the Howard government argued the tax system was out of date, complex and inequitable, heavily reliant on individual and company tax, and prevented Australia competing on a global level.

The Howard government’s new tax system in 2001 was an answer to this. This new tax system seemed to have all the reform solutions needed – income tax cuts for hard working Australians and at long last the introduction of a goods and services tax, along with some pretty big welfare reforms.

Everything appeared to be going quite well with the new tax system – revenue from company tax was way, way above any Treasury official’s forecast.

But fast-forward 10 years and cracks began to show, prompting a new review into the effectiveness of Australia’s tax system. The Henry Review, provided some 138 recommendations for tax reform, yet very few saw the light of day. And just five years later, another review was conducted with then Treasurer Joe Hockey at the helm, which since seems to have been not so much parked as abandoned.

https://cdn.theconversation.com/infographics/264/771106ca8f0bf8ba728e219a8b60d33fbe6ebe5b/site/index.html

Income taxes from individuals have always made up the greatest share of tax revenue in Australia. Prior to the introduction of the Howard government’s tax system, income tax from individuals made up 57.3% of the total tax pool – it now accounts for 51.0% of total tax revenue.

The Howard reforms included a reduction in personal income tax rates. During the next ten years Australian businesses shouldered a greater share of the tax burden, with their share rising from 17.9% in 2000-01 to 27.4% in 2007-08 at the peak of the resource boom. This has since fallen to 20.6%.

The contribution of taxes on goods and services has remained fairly steady since moving from sales tax to the GST in 2001. GST revenue is consistently around 16% of all tax revenue.

https://datawrapper.dwcdn.net/byxQ9/5/

The share of tax revenue from customs duties, excises and levies has been falling since 2001, from 14.5% to 9.5%. Other tax revenue has been fairly consistent over time, contributing less than 2% of total tax revenue. However, in 2012-13 this increased to around 4%, with the introduction of the short-lived carbon pricing mechanism.

The problem with predicting future revenue

Taxation revenues were consistently underestimated prior to the global financial crisis, but have fallen below expectations since its end. The tax-to-GDP ratio has been anchored close to 22% since 2012-13. This is despite eight successive federal budgets since May 2010 projecting future tax revenues in excess of 24% of GDP.

And where does the greatest divergence lie between forecast revenues and out turns?

Company tax revenues are consistently – and by some margin – the most difficult to predict. Receipts fell short of forecast estimates of around 5% of GDP, by around one percentage point over four years, since the May 2010 budget.

Estimates of company tax receipts for 2017-18 were revised upwards by A$4.4 billion in the latest MYEFO update in December 2017. Should this eventuate, it will take total company tax revenues for 2017-18 to A$83.8 billion (around 4.6% of GDP).

The government may well feel that this creates space for a company tax cut and personal income tax cuts in the upcoming budget.

https://cdn.theconversation.com/infographics/268/d0b3499c04c8256881086278e98204a42ac38918/site/index.html

Revenue from individual income tax has been projected to rise to around 12.5% of GDP over the forward estimates, in each budget, since May 2013. Revenue has risen from 9.5% of GDP in 2009 to 11.4% by 2016 before dropping marginally by 0.2 percentage points in the latest Mid-Year Economic and Fiscal Outlook (MYEFO) forecasts.

But wages have not played the leading role that they have been cast in, in every budget going back to May 2011. Since this time wage growth has been forecast at an elusive 3% mark or thereabouts, yet has fallen well short of this each year and currently stand at 2.1%.

https://cdn.theconversation.com/infographics/269/70054f29a094207444d5bea6aa727fa0af8b543c/site/index.html

Tax thresholds remained fixed between the 2012 and 2016 budgets, and the only change since has been to lift the 32.5% tax threshold from $80,000 to $87,000, effective 1 July 2016. Tax revenue growth up to now has certainly been driven by the effects of bracket creep.

Unless tax thresholds in the future are increased at least in line with inflation, this means that average taxes will continue to rise.

Plans for a 0.5% increase in the Medicare Levy rate from July 2019 have been shelved, which would have raised around A$8.2 billion over the next four years to support the National Disability Insurance Scheme.

Expectations have been raised for tax cuts to businesses as the government advocates for the “trickle-down” benefits to Australian households.

It’s hard to see how this will lead to anything other than a shift in the tax burden towards individual taxpayers – at least in the short term. This is unless company tax cuts are balanced with substantial, not modest, cuts to personal income taxes as well.

The ConversationIt seems Scott Morrison will be banking ever more on a strengthening economy to support Australia’s taxation revenues into the future.

Rebecca Cassells, Associate Professor, Bankwest Curtin Economics Centre, Curtin University and Alan Duncan, Director, Bankwest Curtin Economics Centre and Bankwest Research Chair in Economic Policy, Curtin University

This article was originally published on The Conversation. Read the original article.

Advertisements

Word-less Churches


The link below is to an article concerning churches that are abandoning the Scriptures.

For more visit:
http://www.ligonier.org/blog/word-less-church/

EVANGELICAL CHURCH MAY BE ON THE VERGE OF COLLAPSE IN THE U.S.


Some believe the United States is on the verge of a major collapse of the evangelical church. That’s according to an article published by Michael Spencer in the Christian Science Monitor. He says this breakdown could also be the beginning of the marginalization of Christians as a whole in a country founded on the Judeo-Christian Ethic, reports MNN.

Warren Smith, author of the new book, Lovers Quarrel with the Evangelical Church, agrees. He says the reason it may collapse is because it’s forgotten about the true foundations of the faith. Smith says one pastor of the largest mega-church in the U.S. avoids the basics. “He doesn’t like to focus on sin. He doesn’t like to focus on the bloody cross, on the crucifixion of Jesus, on the need that we have as humans to have our sins atoned for. He likes to focus on the positive, on the upbeat.”

Spencer agrees as he outlines reasons why the evangelical church is on the verge of collapse. He says, “Evangelicals have failed to pass on to our young people an orthodox form of faith that can take root and survive the secular onslaught. Ironically the billions of dollar we’ve spent on youth ministries, Christian music, publishing, and media has produced a culture of young Christians who know next to nothing about their faith.”

Many churches have followed that pattern which is why, Smith says, “It has become a church that really focuses on therapy rather than redemption.”

As a result, Smith says the evangelical church in decline. “There are all kinds of data that says we actually have fewer Christians today than we did 50 years ago.”

Smith says it’s because evangelicals have gotten away from their calling. “It’s not to make decisions, not to make converts, not to get people to raise hands at an evangelistic rally or a youth rally, but rather to make disciples and ‘teach all things I’ve commanded.’ That’s what the Great Commission really says. That’s what we’ve forgotten.”

There are more mega churches in the United States than ever before, but Smith says it’s not because there are more Christians. He says the data suggests that more Christians are flocking to mega churches and abandoning small churches.

The sad thing is, says Smith, “Mega churches provide an opportunity for people to come and be spectators rather than come and be participants or engage in true disciple-building activity.”

When Christians fail to participate, “They’re less apt to share their faith, less apt, for example, to believe in the bodily resurrection of Jesus. They’re less likely to believe that the Bible is the inerrant Word of God,” says Smith.

Smith became convicted of where he was spiritually when he realized he had been attending a church for 15 years and didn’t know how to communicate the Gospel to his kids. He says, “If you are going to a church that hasn’t, after three or four or five years, prepared you for leadership by its teaching and providing opportunities for leadership, then I would suggest there is something flawed about that church.”

There is good news, says Smith. “God is faithful. God is sovereign. God is not going to let the gates of hell prevail against His church, and we can experience the joy of being a part of that.”

As we get back to God Word, Smith says, we’ll have the desire to make disciples through church planting and other means, we’ll want to be involved in our community, and we’ll instruct our children to be followers of Christ.

Report from the Christian Telegraph

PAKISTAN: LAHORE – Sri Lankan Cricket Team Attacked by Terrorists


With the third day of the second test between Pakistan and Sri Lanka soon to be underway at the Gaddafi Stadium in Lahore, Pakistan, the Sri Lankan cricket team was making its way to the stadium. As the team bus was about to enter the stadium it came under attack from terrorists.

A rocket was fired at the bus and missed, probably saving the lives of those on the bus. Following this explosion the bus came under fire from grenades and small arms as masked terrorists moved through the surrounding trees and bushes.

Travelling not far behind the bus were the umpires of the second test and their van was also attacked. The driver of the van was killed by gunfire.

The terrorists were soon engaged with Pakistani security forces. However it is understood that the terrorists have escaped the scene, fleeing into side streets away from the stadium. It is thought there may have been up to a dozen terrorists in the attack.

So far the reports are sketchy as to just what the fatalities are, but at least eight people are dead and six Sri Lankan team members have been wounded in the attack. The police escort for the Sri Lankan team have taken at least five fatalities. There are reports that up to 25 security force members have also been killed, but this is unconfirmed.

Thilan Samaraweera (gunshot wound to the upper leg), who yesterday scored his second consecutive double-century and Tharanga Paranavitana (deep shrapnel wound in the chest) have been treated in hospital and are the most seriously wounded of the Sri Lankan players after being hit by gunfire. Also wounded were Kumar Sangakkara, Thilan Thushara, Suranga Lakmal and Ajantha Mendis. Also wounded was support staff member Paul Farbrace. They received shrapnel injuries of various kinds.

Sri Lanka has now recalled their team, abandoning the remainder of the Pakistan tour. The team is expected to leave Pakistan as soon as possible.

The attack resembled the well planned Mumbai attacks a few months ago and the terrorists in this attack were clearly well trained.

TURKEY: LINKS TO MASTERMINDS OF MURDERS IN MALATYA PURSUED


Lawyers aim to uncover size, structure of ‘deep-state’ conspiracy.

ISTANBUL, February 24 (Compass Direct News) – The identities of the middlemen linking the attackers and the alleged masterminds in the murder of three Christians in Malatya, Turkey are expected to take clearer focus following the latest hearing.

“These five troubled youths didn’t wake up one morning and decide to commit a murder – there were others directing them,” Ozkan Yucel, plaintiff attorney representing the families of the victims, told the Turkish press last week, before Friday’s (Feb. 20) hearing at the Malatya Third Criminal Court in southeastern Turkey.

Two Turkish Christians, Necati Aydin and Ugur Yuksel, and a German, Tilmann Geske, were tied up and stabbed to death at Zirve Publishing Co. offices on April 18, 2007. The last several hearings of the trial have supported suspicions that others were involved in the murder besides the five youths suspected of carrying out the attack. More difficult, however, is determining the scope of the murders and the organization of its conspirators.

Plaintiff attorneys have called in a heavy slate of witnesses for the next hearing, ranging from a gendarmerie commander to an Islamic theology instructor at a nearby university. Mehmet Ulger, the former gendarmerie commander of the province, and Ruhi Abat, a theology instructor at the local Inonu University, are among the 10 people expected to testify at the April 13 hearing.

According to the Radikal daily newspaper, an anonymous letter sent to Turkish churches and obtained by the media claimed Ulger acted as an instigator to the murders and directed Abat to prepare arguments against missionary activity. The letter also implicates local politician Ruhi Polat, a member of the ultra-nationalist National People’s Party and a friend of the father of alleged ringleader Emre Gunaydin.

Plaintiff attorney Hafize Cobanoglu told Compass the anonymous letter played a part in the selection of Abat and Polat as witnesses.

“In this sense, paying heed to all these people is important,” she said. “However, I don’t believe they will say much when they testify.”

The call for new witnesses came two weeks after the arrest of two men suspected of acting as liaisons between the five suspects and the alleged “deep-state” masterminds of the attack.

Varol Bulent Aral, a journalist attached to a far-reaching political conspiracy known as Ergenekon, and Huseyin Yelki, a church-going, former volunteer at Zirve, were taken into custody earlier this month.

Aral, 32, has attempted to deflect blame for instigating the youths to commit the murders. He recently told a public prosecutor that the true force behind the killings was a gendarmerie intelligence unit established in the ’80s to counter Kurdish sectarian violence in the country’s southeast.

He claimed to have been approached by a member of the intelligence unit who sought his assistance. Aral said the member told him the unit would focus on three issues: missionary activity, Alevi-Sunni relations, and the Turkish-Kurd issue.

Aral claimed to have seen Gunaydin become involved with this unit, according to the daily Milliyet.

Recent court hearings, however, have produced substantial evidence that the true masterminds of the murder were members of Ergenekon, a clandestine nationalist group that sought to overthrow the current government by engineering domestic chaos.

Yelki, 34, has lived in the southern city of Adana for the nearly two years since the murder. He has had a rocky history with the leadership of Turkey’s small Protestant church, which he accused of abandoning him during difficult financial times in a series of defamatory e-mails.

He volunteered for six months at Zirve, site of the brutal torture and murder of the three Christians.

Gunaydin, the suspected ringleader of the youths accused of murder – including Salih Gurler, Cuma Ozdemir, Hamit Ceker, and Abuzer Yildirim – has claimed in previous hearings that he was offered promises of state support for killing the Christians.

In the course of Friday’s brief hearing, Ugur Yuksel’s mother, Hatice Yuksel, stood up and loudly asserted that Gunaydin had threatened her. She did not specify the nature of these threats, and court officials told her to be silent.

The next hearing for the trial is scheduled for April 13, four days before the second anniversary of the murders. Many attorneys believe the case will be fully integrated with the Ergenekon case in the upcoming months.

Report from Compass Direct News

STATISTICS: particularbaptist.com


Since I have nothing much to ‘Blog on’ about tonight, I thought I might indulge in some more statistics. A few days back I wrote about 5 000 visitors at this Blog (which is now above 6 250 by the way), which got me to thinking about my main web site called particularbaptist.com (it used to be Aussie Outpost and before that NRBC – for Northlake’s Reformed Baptist Church).

Particularbaptist.com has been that name since July 2006, when I switched the site to a new hosting company and adopted the before mentioned domain name. The Aussie Outpost ‘brand (so to speak)’ had been established for some time and so the move to a new URL, name and domain would take some getting used to and the early stats showed this to be the case.

In July 2006 there were 333 hits on the site, with a total of 13 visits and 108 pages viewed. By the end of the year there had been 8 960 hits on the site, with a total of 643 visits and 3208 pages viewed. This was about what I would have expected given the changes and the effort involved in becoming re-established as particularbaptist.com.

Having looked at the statistics for the site a couple of days ago I was amazed at how strongly the site is now performing and it has encouraged me to continue with the work (I had been contemplating abandoning the project). All of those doubts that probably plague ‘webmasters’ were mine – is it worth the effort, is it at all useful and profitable to visitors, is it making a useful contribution, etc?

Anyhow, I have been encouraged to press on by the figures and have found that the statistics prove useful as that – encouragement. At times, that is very important – at least I think it is. So what are the latest figures?

Toward the end of September 2008 there had been 368 756 hits on the site, with a total of 35 979 visits and 233 571 pages viewed. All that in just over 2 years is simply amazing to me and above what I had expected by a long way. With the growth trend the site should have its 500 000th hit and 50 000th visit early in the new year and possibly a million hits by the end of 2009.

Isn’t the Internet incredible – so many visitors from all over the world?

I’ve started a statistics page on the site mainly for my own benefit (so I don’t have to wade through all of the figures over and over from the web host which is a bit complicated) and for supporters of the site at:

http://www.particularbaptist.com/stats.html

It’s all very simple on the statistics page at the moment and hopefully it will stay that way. I will be adding other bits of statistical trivia to the page over time, including a list of what countries the site has had visitors from. All very interesting.

The site’s homepage is pretty simple to find these days:

http://particularbaptist.com