Of necessity, tax avoidance has become a key preoccupation for much of middle Australia

We all know about the cash economy, and that many tradies (for example) will give a discount of up to about 20 per cent for cash.  Criminals, such as drug dealers, generally pay no income tax but may have issues with unexplained wealth.  The GST was supposed to hit the cash economy but, in reality it has had a very limited effect.  During the Howard government years, I recall asking our plumber (who always requested payment in cash) whether the GST would affect him.  He rubbed his hands together and replied "extra 10 per cent mate".

More importantly, small businesses also use a number of legal measures to reduce their tax.  Income splitting with family members (including a business partnership with a spouse or use of family trusts) to reduce income tax is common, and can save a lot of money.  Use of (lower taxed) fringe benefits is also not uncommon.  In recent years nominally commercial vehicles, like dual cab utilities, have soared in popularity because they can be used as multi-purpose family/business vehicles, and still be fully tax deductible.  Businesses in general also have some scope to time purchases and sales to smooth or reduce their taxable income, while instant asset write-off has proved a boon for those seeking to defer income tax liabilities.

Wage and salary earners have the least scope to minimise their tax and (relatively speaking) are "sitting ducks" for the taxman.  They are also generally less aware of the tax taken from them (because PAYE income tax is taken at source), whereas business owners generally pay their income tax in arrears out of their own bank accounts and are very aware of what tax they pay.

The main (widely-used) tax shelters open to wage and salary earners are owning their own home, and superannuation.  Australians invest heavily in home ownership, in part because the imputed rent they save through owner occupation is untaxed.  The family home is also exempt from capital gains tax and most land taxes, and is also generally excluded from assets tests on pensions and benefits.  Superannuation is also popular because it too is concessionally taxed.

Other popular tax efficient investments include shares providing franked dividends, capital growth assets (attracting concessional capital gains taxation), and negatively geared property (less common in these days of low interest rates).  Capital gains tax also can be deferred indefinitely, provided the taxpayer holds onto, rather than sells, the asset.

Even public servants these days have been facilitated in respect of tax minimisation due to salary packaging for senior executives (which often includes private-plated government-supplied vehicles, as well as generous superannuation).  Senior public servants also are often officially encouraged to use the services of tax planning advisors, such as McMillan Shakespeare Ltd.

Politicians (especially at federal level) are notorious for receiving generous untaxed travelling allowances (around $300 a night based on the cost of staying in a five star hotel), even though many reside in much cheaper flats (often shared), when staying in Canberra.  Federal politicians also receive electorate allowances of between $32,000 and $46,000 per annum, though they must keep receipts, and the unspent amount is treated as taxable income.  Politicians also benefit from generous retirement and termination provisions.

In many ways the Centrelink pension system is the flip-side of income taxation.  More than three-quarters of those aged 65 and older still receive a full or part age pension from the government, which is subject to income and assets tests.  Australians are notorious for going to great lengths to keep themselves eligible for the pension and related benefits.  It is generally the case that the upper middle classes, unless they squander or otherwise dispose of their income and assets, will not quality for the pension.

The real cause of high levels of income taxation and rising public debt is the inexorable rise in government spending, and that taxpayers fail to realise that they themselves will be the eventual payers for the "free" stuff supplied by government.  Put simply, people fail to realise that higher government spending means that they will have less of their own money to spend themselves, especially if they have high taxable incomes.  Also, since the end of the Howard era, there seems to be no political appetite for cutting government spending.

Recent years have seen panicked spending on COVID, soaring spending on things like child care (heavily benefiting dual income middle-class families), and out-of-control spending on the (unfunded) NDIS, to name but a few.  Poor spending programmes are always difficult to reverse, and, during the recent COVID induced spending binge, all sorts of additional spending was slipped into Government budgets, largely unnoticed.

A lot of public attention has been focussed on inappropriate pork barrels, such as the "sports rorts" and "suburban car parks rorts".  While such abuses are rightly condemned, they generally are only low ticket items compared to the billions lavished on Jobkeeper and expenditures like dud defence acquisitions (e.g. French diesel submarines, overpriced underperforming frigates, helicopters not fit for purpose) or infrastructure that is not cost effective (e.g. Inland Rail project).

Given the need to reduce the size of both the Commonwealth and State budget deficits (all currently very substantial), there seems to be no reasonable prospect of income tax relief beyond that already announced.  Given that Australia is surrounded by sea, one would think that collecting taxes on spending would be less problematic than in (for example) European countries with multiple land borders.