What's Fair Family Funding?
All Australian families will be aware of the financial challenges that go into raising a family today.
How much does the Australian Government work to ensure that all families – regardless of their choices – experience financial justice in today’s Australia?
(For a more complete history of family taxation, see below…)
The current system financially discriminates against families who make their own choices about how they raise their family – including the use of childcare, who works outside the home and when, and how many children a couple chooses to have.
As just one example, a woman who gives birth to a child will be given (maximum) $13,330.80 (from the Federal Government) in paid maternity leave if she has worked outside the home for a minimum of 10 months during the previous 13 months before the child was born. In additional, she’ll receive a maximum amount of $2,239.86 in the form of the Newborn Upfront Payment and Subsidy (for a first child, otherwise the amount goes down to $1,120.56).
TOTAL: $15,570.66 (first child)
However, if that same woman has not had paid employment outside the home for that period – say if she was caring for an older child or had other duties – she will receive only a maximum total of
$2,239.86 – the Newborn Upfront Payment and Subsidy (again for a first child, amount for second and subsequent children is $1,120.56).
TOTAL: $2,239.86 (first child)
ANOTHER EXAMPLE If a family has both parents doing paid work outside the home, necessitating the use of childcare, they will receive the equivalent of a maximum (approximately) of $799.00 per week in childcare subsidies, per child.
However, if one of the parents chooses to care for their child themselves in lieu of paid employment, and therefore not use daycare, they will not see a penny of that $799.00.
The campaign
We’re calling for a fairer system.
Our campaign ‘Fair Family Funding’ calls on the Federal Government to implement a system that gives choice back to parents. The amounts in Childcare Subsidies and Paid Parental Leave should be given to **all** parents, regardless of what mode of care they choose to employ for their children.
Click here to hear from fellow parents on how the Childcare Rebate & government provided Maternity Leave has influenced the care of their children.
Click here to read a submission to the Federal Government by a group of university educated parents on the need for economically accurate valuation of parent-provided childcare.
We believe families deserve choice in….
- how they care for their children
- when to have another child
- when or if primary caregiver parents (father or mother) go back to paid work
How you can help
We invite you to add YOUR name to our petition calling on the Federal Government to implement these changes to create a fairer system for families.
And don’t forget to sign up to our Australian Family Association email list to stay informed.
A bit of background...
Taxing Individuals or Taxing Families?
When the United Kingdom introduced income tax in 1799, the incomes of husband and wife were added and taxed as one. Australia, however, since the introduction of Federal income tax in 1915, has always taxed husband and wife separately. This has also applied to children whose incomes have been taxed separately. But separate taxation of family members on their legal incomes ends up violating both of our key principles of taxation—it distorts people’s behavioural choices, and it treats people in similar situations unequally.
Naive individual taxation—taxing individuals solely with regard to the income they legally own or control—fails when tested against this principle because it ignores income transfers. For example, Australia does not tax trustees on the income they control. Instead it allocates the income to the beneficiaries selected by the trustees and the tax liability follows the income.
If one were to apply the same principle to the situation of a family breadwinner, the income which is earned by that breadwinner is to some extent transferred to other members of the family. From this point of view, family taxation is not a question of giving tax relief or a ‘tax subsidy’ to a breadwinner in respect of dependants. The question is more basic—who ultimately enjoys the income?
Income Splitting
Most committees of inquiry which have looked into the subject have argued that equitable treatment demands that where two or more people are dependent upon a given income it should be taxed less harshly than when that income is enjoyed by one person alone.
The Irish Commission on Taxation recommended income splitting between spouses, arguing that ‘incomes are shared in practice’ and ‘if the tax system is to be equitable it must recognize this fact’.
The New Zealand Task Force on Tax Reform recommended partial income splitting based on equivalence scales for married couples and the United States Treasury did not question the continuation of joint returns for married couples in its 1984 report on tax reform.
Similarly, Belgium introduced a form of income splitting; and the United Kingdom, while moving away from aggregation as being inequitable, continues to allow tax relief where a husband and wife are dependent upon one income.
Towards a Fairer System for All
Australian families need a more equitable system which offers real choice in the way they organize their working arrangements and domestic affairs. To this end, we have sought to present the case for a new approach to family assistance. We suggest that all childcare payments should be wound into a single, non-discriminatory voucher payment made equally to all families with children, payable on a periodic basis, allowing families to choose their preferred form of childcare for their babies/children.
Conclusion
No society has achieved or ever will achieve 100% labour force participation. Nor should any society aspire to such an objective, especially if it comes at the expense of its future existence, as married women abandon the raising of the next generation as an over-taxed and under-appreciated activity.
There will always be persons dependent upon the sharing of the incomes of those in the labour force. A failure by the tax system to recognise this massive family redistribution of income tends to force those who cannot be supported by the incomes of other family members to enter the paid work force on their own account, quite possibly against their inclinations and at the expense of other socially worthwhile activities.
Fixing inequality in family payments taxation and childcare
