Tuesday, October 20, 2009

Why are we paying so much tax?

Australians are among the most heavily taxed people on earth. Does that mean Australians are getting a bad deal? I can only compare between Malaysia and Australia, as I have lived in both places. The maximum tax bracket is 45% in Australia, and 28% in Malaysia. Added to the basic income tax, one should also include municipal rate (or assessment), land tax (or quit rent), sewage disposal, service tax, value-added tax (VAT or GST), capital gains tax, estate duty, import duty, etc. All these are just different ways of emptying your pocket. In return, the government provides services.

In doing a comparison, one should look at how much services he gets for the amount of tax he pays. Although one pays less tax in Malaysia, I feel that when everything is added up, an Aussie taxpayer gets more out of the system. I won't delve into this quantitatively. The point I want to make in is that while we complain about high taxation, we should not forget that Australia is quite a socialist country in the sense that there are a lot of benefits going to the disadvantaged, the poor, and the old. Australians enjoy free medical care and highly subsidized education, plus a host of other benefits such as child care, youth allowance, family benefits, unemployment benefit, etc. What we should do in Australia is to ensure that the politicians do not steal these benefits away from the people while still maintaining high taxation.

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