Debit Tax / Reform Policy
15th January 2016
DEBIT TAX - A FAIRER TAX SYSTEM FOR AUSTRALIA
So, what does “Debit Tax” offer?
The Debit Tax is a concept that was evolved by Leonard Crisp in 1992. Independently of this, St. John’s University (USA) professors Colabella and Coppinger also prepared a comprehensive paper in which they called it “Withdrawals Tax” (WTX) or “Cyber Tax”. Once you look at “Debit Tax” you may just wonder why we didn’t just go there in the first place for the fairest tax system for the Century. Obviously today’s technology makes this tax possible and attractive. We can thank the power of computers and electronics for finally giving us the power to transfer one percent over to the Treasury in a twinkling of an eye at the time we withdraw any money from our account. No form filling and no more manual calculations.
According to the Debit Tax Council of Australia, “Every hour of the day money is withdrawn from savings accounts, cheque accounts, insurance companies, business and investment organisations, and financial institutions of all kinds. Indeed, all money transactions are withdrawn from some kind of bank or financial institution that holds money in trust. The Australian Taxation system is one of the most complex and inefficient in the world. Currently the federal, state and local governments are imposing on the people of Australia an estimated 125 different taxes, fees, levies, stamp duties and rates which in total produce approximately $430 Billion in revenue.
The main non-contributors to our taxation revenue is BIG business, especially international companies where the parent companies charge consulting fees to the exact amount of any profit made by the company in Australia. So these companies may pay no tax at all in Australia.
The primary taxation streams are Income tax, Payroll Tax, Company tax, (when they pay it), GST, mining royalties etc.
Love Australia or Leave Party, if elected, will eradicate almost every one of these 125. Allowing only those permitted by the Federal Constitution under State jurisdiction to remain, and those being at a substantially reduced amount, being conditional on receiving their Debit tax allotments. LAOL will see a 1% tax automatically deducted upon withdrawal of any funds from a Financial Institution to replace over 90% of the current archaic tax system.
That means; no more personal income tax, no more GST, no more payroll tax, company tax, capital gains tax, land tax, stamp duties, NO MORE TAXES! No more BAS statements, tax returns, tax compliance and paperwork, no more headaches, ALL GONE! Council services/water rates, State and Territory vehicle registration, electricity and fuel costs all substantially reduced, leaving far more of your income your own, resulting in a substantial improvement to your quality of life.
Think how much money it costs the economy with companies and individuals having to comply with all the myriad of taxation requirements like income tax returns, BAS, GST, etc. So much productive time is wasted acting as accountants and tax collectors for the Government.
On 2013 figures by the Australian Payments Clearing Association, Australians move over $150 BILLION per DAY through our financial institutions. Currently the Complex inefficient Australian taxation system produces an income of approximately $430 Billion per year. A rate of 1% tax on all withdrawals from Financial institutions equals 1% of $150 Billion which equates to $1.5 Billion dollars a day which equates to roughly to $547 Billion in revenue, of which is $137 Billion a year more than currently achievable. We could clear our current debt of $431 Billion in around 3 years.
Now to put this into context, currently a pensioner for example, receives about $33900 a year for a married couple. They don't pay income tax on it, but they do pay rates, GST, registration, stamp duties fuel excise etc, etc, so the amount they pay in combined taxes will probably be in the vicinity of 25% of their pension which would be around $8500 p.a. With the debit tax system that would fall to 1% of their pension which is $339 (if they spend every penny), so effectively the pension increases by $7200 a year.
So consider an average worker on $1000 a week income. If you spent your entire weekly wages of $1,000.00, you would have only paid a maximum of $10 in tax and that is all, just $10! Compare that to the current $183 in tax that you would pay if your weekly earnings were $1000.
You may ask how this can be. Well every time a dollar is withdrawn it attracts 1% TAX that dollar is then paid to someone else and when they withdraw it they then also pay 1% tax. That one dollar may go through 8 to 10 different transactions a day each one giving the Government 1% in tax. So you can see a cascading / snowball effect. The rate of “Debit Tax” can be adjusted to suit any economy. The most important and fairest consideration is that everybody is taxed at the same low rate regardless. At the Australian national Tax Summit of 1996, the criteria used to assess the different tax systems put forward were:
- The tax must be simple.
- It must have a low compliance cost.
- It must be transparent (i.e. no hidden taxes.)
- It must not be avoidable.
- It must be adequate (raise sufficient revenue).
- It must be socially equable.
The “Debit Tax” option fitted all these criteria and quite clearly outshone the rest. For example, if you earned and withdrew $100,000 in a year, you would only pay $1000. Remember, what you leave in deposit does not attract tax, which encourages savings. There are absolutely no other taxes to pay.
Businesses would also make huge windfall in extra profit that could be used to fund growth and expansion.
A tax such as this would revolutionise the way we operate our economy, giving real benefit and real wealth to small business and employees alike. In fact, every level of society would be better off and the huge wastage of current tax collection costs of gathering hundreds and hundreds of different taxes would thankfully become a thing of the past. In short, “Debit Tax” is an absolute winner, and we should all look forward to the day when the entire Inland Revenue Department will finally be abolished altogether.
Economists and tax accountants who have looked into the Debit Tax have praised the Debit Tax system because not only does it work but it achieves fairness while eliminating time consuming paperwork. Tax evasion is impossible and multinationals will have to pay their fair share of tax that presently is being carried by the average tax-paying worker.
Australia’s advanced banking systems is already set up perfectly to administer the Debit Tax, which requires electronic debiting as withdrawals are made. The only people who should be against this tax are the multinationals who presently pay very little or no taxation, and can afford to administer their businesses to minimise tax obligations, something that the average worker is not able to do.
Our present taxation system is so complicated that even the taxation agents and accountants are confused and frustrated by it. In comparison the Debit Tax can be simply explained in half a dozen pages and requires no book- keeping at all. Accountants would be occupied in more productive areas such as business efficiency and productivity, while tax agents would be employed to monitor banking operations.
HOW IT WORKS To initiate the introduction of the Debit Tax, Treasury inspectors, through an encrypted program, would adjust all bank and financial institution computers to calculate a hypothetical levy of 1% Debit Tax on all withdrawals one year before the Debit Tax comes on line. During that trial year, the Treasury (under tight Government scrutiny) will actually see and monitor the continuous flow of potential revenue to enter the Treasury coffers. When the trial, or dummy run, is completed at midnight on June 30th, real money (NOT PROMISSORY NOTES) will start flowing into the Treasury and all other Federal taxes will then cease.
Banks and financial institutions will not be required to alter their operations. Australia would be relieved of its huge tax burden and enter a highly prosperous tax-free economy, attracting investment capital as the world's largest tax haven. It would be an offence under the Debit Tax Amendment Bill to deliberately operate outside the national money flow and the penalties would be severe. Peter Alexander Gargan - Australian Debit Tax Council. These are just some of the advantages of using just 1% Debit Tax. All Income Tax and all other Federal Taxes levies and duties become invalid. Tax returns and income means declaration abolished. No BAS! No tax on profits, savings, investments, assets or pay cheques. No taxes on income, payroll, provisional, property, inheritance, or goods and services.
No income tax means an instant tangible wage rise for everyone. Goods and services will be cheaper without sales tax and import tax. No sales or hidden taxes, means more in the pocket for those in the Welfare System. The method of collecting revenue will be implemented by Electronic Transfer Systems (EFT) - the ultimate in efficiency. No more time, money and paper wasted on daunting tax laws and complex tax returns. Tax collectors will be appointed to more productive and useful positions. Accountants employed by businesses, large and small, would be able to use their training and experience in the manner in which it was meant to be used, i.e. making a business more productive and cost efficient. Small businesses will not be hindered by our present time consuming system, and will consequently be encouraged to grow and employ more people.
Big Multi-National Companies will be required to pay their fair share. No tax cheating or tax avoidance necessary or possible. It would create a real user pays system providing a continuous flow of revenue to the National Treasury. Our large and expanding national debt will be settled very quickly. Australia will become the TAX HAVEN OF THE WORLD Australia will indeed be the "Lucky Country". It would allow people to save money for retirement, with no penalties.
Our National Fund Reserves would be rebuilt by the increase in savings deposits, deposits encouraged by the Debit Tax System. At present our reserves are at their lowest since the Great Depression. Our current Tax System Is outdated and has proven to be too complicated and impracticable to businesses and individuals. It has many disadvantages:
1. Pushes production out of Australia creating an imbalance in trade and increasing our foreign debt.
2. It is inequitable and unjust.
3. It is costly in time and money.
4. It is complicated.
5. It destroys incentive.
6. It penalises individuals whom are industrious, use initiative and wish to succeed.
7. It is a great impost on small business.
8. It creates tax avoidance and cheating.
Too great a proportion of Australia’s tax is now bled from low and middle income earners, seniors and small business. The current tax system is hurting the everyday and hard working Australians, it is time to remove the burden from every Australian to help pay the bills and put food back on the table. It is time the large multinational companies and businesses get to pay their fair share of tax in Australia. The current system is out of control and only benefits fully imported products at the expense of Australian jobs.
Our constitution is clear that a tax shall not exist upon another tax. All double taxation shall be abolished and the double taxation Act of 1953 repealed. Love Australia or Leave Party will support the Electronic (Debit) Tax, which will remove all the inequities, supply sufficient revenue direct to treasury and eliminate taxation as a political issue. Banking and currency will return to government control. Value of the dollar will be controlled by the wealth of our resources and not foreign speculation. Many restrictions on other Australian financial institutions will be removed, especially from credit unions and building societies.
The banking industry has no authority in the Debit Tax system. Government payments that emanate from the Federal Reserve Bank are not subject to the Debit-Tax. The Debit-Tax is not useable or collectable by a city, municipality, or state, as these governments are not a part of the monetary system. The DEBIT TAX-SYSTEM is the most efficient tax system ever devised to fund the National Treasury of any developed nation. Tax collecting now becomes the function of a programmed computer linked to the banking system under the control of the Treasury Department. Individuals, businesses and corporations will no longer be required to be self-Tax collectors, as they are today, thus eliminating potential sources of injustice and corruption.
Source: Adapted from Leonard Crisps Debit Tax Council Australia model 1991-92-95
NOTE: The Debit Tax is currently being reviewed by an accountant on behalf of Love Australia or Leave Party and projection rates up to and including year 2020 will soon be available.
** Please listen to Alan Jones and find out just how good the ‘Debit Tax’ really is **
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