The Treasurer, Joe Hockey, will release a discussion paper on Monday on our future tax system, starting a national conversation on how the government can best collect revenue.
Tax reform has an impact on the daily life of all Australians, which is why it is so important for governments to get it right. Deciding what is right is a moral issue. It involves identifying the relevant values, and finding technical solutions to achieve those values. The social teaching of the Catholic Church does not propose technical solutions to taxation regimes but it does have something worthwhile to say about values.
We need a tax system firmly focused on the needs and welfare of people, not on abstract things like economic measurements. How governments collect revenue is just as important as how it is spent.
Making difficult decisions is that much easier if you have identified a clear set of values as the criteria to help you sort out what's important and what's not. In that spirit, I want to set out a few criteria to help evaluate new tax proposals: the common good, distributive justice and the preferential option for the poor.
The common good refers to the whole combination of factors which allow us to reach our fulfilment. It includes the recognition that we live our lives and achieve our potential not just as individuals, but in community with other people. It refers to the aspirations and needs of all people in the community. That means we're obliged to look out for one another. That includes ensuring people have adequate food, shelter, healthcare, education and all that will promote human flourishing. Paying tax helps to promote the common good because it helps the government provide for some of these needs.
How can we raise money to fund the necessary business of government, with the least possible impact on those people who are the most vulnerable?
A good social safety net is vital, but it does not override the need for a personal encounter with other people. We cannot and should not rely on the Government to look after everyone. Paying tax does not dispose of the need for generosity between human beings. We all have opportunities to lend a hand to people who are less fortunate.
Distributive justice recognises that the burdens of the community should be shared based on the ability of people to contribute. Those who can contribute more should do so. Australia is a relatively low taxing and spending nation compared to other OECD countries. How can we justify a system where the already rich keep getting even richer?
Drawing on the last census the Australian Bureau of Statistics tells us the top one-fifth of households had substantially more wealth than all the rest put together.
Between 2003-04 and 2011-12, the top fifth of households increased their average net worth 28 per cent over those eight years, while the bottom fifth of households saw only a 3 per cent rise. Remember too that we have to turn those "percentages" into real dollars. The wealthy are getting a bigger share and from a bigger base.
The preferential option for the poor is a closely related idea which says that the greater the needs of people, the greater the responsibility we have to respond to their needs.
Australia's tax system has many aspects in sympathy with these three principles, but direction can be lost unless they are kept firmly in mind.
Value-driven reform should be clear about the benefits of proposals, but also the inevitable costs, so the public can weigh them.
For example, the paper may propose structural changes to the tax system to encourage workforce participation. Helping people find a job advances the common good, but for those already in work, do they want to spend more hours in paid employment? What is the cost to families and the community if more people spend more time away from home? Family time is important, even though it is not measured in the national accounts. Work-life balance is a moral question that must be considered by government and the broader community.
There's also been a suggestion one way to improve government revenue would be to extend the GST to private schools and hospitals but if this sends more people to the public system, it does not help the common good.
Tax is a moral issue just as much as it is a financial one. Reform will need to be driven by the right values.
The Reverend Brian Lucas is general secretary of the Australian Catholic Bishops Conference.