More than four million Australian families now receive more in handouts than they pay in income tax, with the income-tax-free club covering 42.2 per cent of the nation’s 9.7 million families. This churning of taxpayers’ money to the government, through the income tax system, and its return by way of a complex system of family payments, with a vast army of bureaucrats in the middle assessing eligibility and administering the payments, desperately needs major reform. It should be a priority of the Henry taxation review. A flatter system of taxation, with lower marginal rates but fewer deductions and handouts, would be simpler, cheaper and more efficient.
As Gerald Ford once said: “A government big enough to give you everything you want, is strong enough to take everything you have.” This is probably the worst legacy of the Howard government, although I would take him over every PM since Menzies.