In this, and many other countries, we have a situation with taxation that doesn't make a whole lot of sense.
The people have needs that are being met, or at least someway to being met by government service provision. This of course has to be paid for by taxation.
So what is tax? It is the fee we have to pay as citizens for the services we require. If this taxation is to be fairly weighted, then the higher wealth citizens would pay more, as they, as a rule get to use more of the services and benefits provided by Government. In a compassionate society this is a necessary subsidy.
There is an onus on Government to use these funds wisely. This is a matter of quality of management.
Unfortunately, there is a mindset that has crept into the debate over taxation, that taxation should be minimised. To do this, services are cut, or allowed to drift into an underfunded position as inflation eats up their budgets. Same result. I have no problem with reviews into wasteful practise and previous pork barreling.
The reality is, if we require these services then we have to pay for them. If we do not have them provided by the public sector, which I support for many reasons including the cost effectiveness as there is no need to put a profit margin on top of the cost of provision, then they have to be provided by the private sector. This is a less than ideal situation because of the aforementioned profit margin, the drive for that margin leading to aggressive cost cutting that degrades the quality of service. This is understandable from the perspective of the private (corporate) entity, as their prime motivation is profit. However it is not good for the recipients of the given service. There is their other option which is to increase the price that consumers have to pay. This is often by those least able to.
Now we come to the crux. Under the private provision of these services there is no subsidy,unless some special deal has been struck, and therefore the wealthy avoid their societal responsibility of helping those less fortunate. Many of those that whine about having to pay a little extra for the health care of the old and sick, fail to take into account the welfare that they receive through child support and education (even private schools are subsidised by the taxpayer) etc. The well to do also get to use the infrastructure more, as they have a higher level of activity. Then there is the welfare/subsidisation of business, both private and multinational corporates. Fuel subsidies, special provision of infrastructure, and all sorts of handouts.
So why do our politicians have this pathological fear of raising sufficient taxation for our needs?
It's actually even worse than that. Whilst degrading many services because of the undefined "need to cut government spending", they hand out tax cuts. (mostly biased to the well off). We see even in the situation of the current flood crisis, when the possibility of raising a bit extra to help the recovery was floated, the chorus of " cut spending instead" was wheeled out again. How cutting services in one area to pay in another is overall effective, is beyond my comprehension. These people need help, and the general population seems keen to provide it. The politicians once again turn the needs of the hurting into a cheap plastic football. Shame on you all.
Lets look at the US situation at present. They are running huge deficits to pay for the previous administrations tax cuts to the wealthy and their aggression in Afghanistan and Iraq, whilst handing over large sums to the banking industry and trying to stimulate the economy after the GFC. Now the people that set up this debacle are trumpeting spending cuts, not to their military adventure I might add, and tax cuts. How one stimulates an economy by applying the brakes, I don't know. It seems to me that the current problem is reduced activity caused by fear. Admittedly some have reduced ability to participate at previous levels, but many do have the ability and don't. You can't increase activity with borrowed money for too long without ending up in a debt hole that will take forever to get out of. This appears to be the US situation at present.
The solution. Raise taxation to fund increased activity. No debt, no interest, and the money ends up going around and ending up back in tax receipts. The funds dispersed by Government through increased service provision end up in the hands of the people( we won't go into the imbalance now), who then spend it etc etc etc. Each step of the flow is taxed.
I suggest the wealthy and the super wealthy should be the prime benefactors as they have the ability to put funds aside, which to an extent chokes the flow, whereas the less well off spend every cent they get which keeps the flow running. Some say that taxation chokes the flow, but this is a misunderstanding of energy dynamics. Provided the money is returned to the flow through provision of services, it is not the case. It is taking it out of the flow that chokes the system.
We have to remember that Money does not exist as a discreet entity. It is an abstract symbol that represents the energy flow through society.
Showing posts with label Taxation. Show all posts
Showing posts with label Taxation. Show all posts
Tuesday, January 25, 2011
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