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Forget about the fight over the stage 3 tax cuts. The real issue is how this country taxes its goats.<\/p>\n
Not just goats. Persimmons, emus, plastic bottles, suburban parking, disused mines, drones, offshore oil wells and games of Keno form part of a system that has been described as micro-taxation by stealth.<\/p>\n
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There are five micro-taxes covering the goat sector alone, including one on wild goat carcasses.<\/span>Credit: <\/span>Nick Moir<\/cite><\/p>\n Thomas Hobbes wrote in the 17th century that man needed a Leviathan to protect them from a life that was nasty, brutish and short.<\/p>\n The Productivity Commission\u2019s Alex Robson reckons Australians need to be saved from a \u201cLevyathan\u201d that is costly, inefficient and being used as a backdoor way to get more cash out of consumers.<\/p>\n Robson and the commission have just released a report into the patchwork of levies that state and federal governments have created over recent decades.<\/p>\n The first levy was put in place in 1929 by the Bruce government at the behest of the wine and grape industry. It wanted a secure funding stream that could be channelled into research and development.<\/p>\n That was the original idea with levies. An industry put up its hand and said we\u2019d like a little bit of taxation that gives us the cash necessary to improve our products.<\/p>\n And that\u2019s generally how the system worked. By 1980 there were 26. All of them were specifically for the farm sector.<\/p>\n Today, there are 248 of them.<\/p>\n Many of those are still for the farm sector. There are five covering the goat sector alone, including one on wild goat carcasses that the commission found raised just $25.62 in revenue in 2022.<\/p>\n The other four levies raised about $1 million that goes back into research for an industry that is the world\u2019s largest exporter of goat (despite accounting for a tiny proportion of the world\u2019s goats).<\/p>\n Outside of the goat world, the other 243 levies raised about $11.7 billion last financial year, collected by about 70 separate agencies. The agricultural levies account for just $600 million of that. <\/p>\n The largest, and a quite recent, levy, was put on the nation\u2019s banks by Scott Morrison when he was treasurer. This year it will reap about $1.6 billion from the nation\u2019s five largest financial institutions.<\/p>\n Other federal levies are imposed on bricks (for industry training), foreign investors (which goes into general revenue), life insurers (for regulatory supervision) and on planes landing at Sydney airport (for noise-reduction programs).<\/p>\n But Canberra is not alone when it comes to levies. The numerous state levies include those put in place to cover the cost of container recycling systems, waste disposal programs and anti-gambling initiatives.<\/p>\n The single largest levy in the country is on the nation\u2019s big banks.<\/span>Credit: <\/span>Dominic Lorrimer<\/cite><\/p>\n There are other levies aimed at the development sector, traffic congestion, car parking and the taxi sector.<\/p>\n Governments, as evident by the near 10-fold increase in levies since 1980, love these imposts.<\/p>\n In the post-Tony Abbott world of everything being a \u201cgreat big new tax\u201d, calling something a levy is a clever way of suggesting the payment is actually doing some particular good.<\/p>\n Taxes are traditionally defined as being compulsory and unrequited payments to government. You have to pay your income tax but you don\u2019t get anything specifically in return.<\/p>\n A levy \u2013 say, on goat farmers \u2013 is also compulsory but they get something in return (in this case, research and development).<\/p>\n But as the Productivity Commission report notes, there\u2019s a Taylor Swift-back catalogue level of unrequited levies that now just go into government coffers, of which the bank levy is the largest.<\/p>\n So, lazy governments now slap the term \u201clevy\u201d on something that is obviously a tax.<\/p>\n Another problem is the sheer number and the cost of these things.<\/p>\n The commission found it cost $8 to collect each $100 for a levy on buffaloes. The next most expensive is the deer slaughter levy at a touch over $6.50 per $100 of revenue.<\/p>\n By contrast, it costs the Australian Taxation Office just 57 cents for every $100.<\/p>\n That\u2019s just the cost to agencies of collecting this cash and doesn\u2019t take into account the cost imposed on those paying the levy.<\/p>\n There are cases to impose levies, especially in the agricultural sector. A modest goat levy to improve meat, milk and fibre production makes sense given the broader benefits that accrue to the economy from a vibrant and growing industry.<\/p>\n But it doesn\u2019t make sense when the cost of collecting the levies is so high that it can be more than the actual revenue raised by the levy.<\/p>\n Of the 130 federal agricultural levies, almost a quarter of them raise less than $6500 a year.<\/p>\n The commission argued that an efficient tax system was a key foundation for boosting productivity.<\/p>\n \u201cIndustry levies generally appear to be at odds with the features of efficient tax system design. They are definitionally narrow in their application, often levied on inefficient tax bases, and can come with high collection costs,\u201d it found.<\/p>\n There is a case to examine whether, once the costs add up, all these levies are worth their collection.<\/p>\n If governments are going to tax every man and his goat, we should do it at least-cost to all of us.<\/p>\n We have to find a way to separate the sheep levies from the goat levies.<\/p>\n<\/p>\n