Ta x , Super+You. Take Control.

Tax 101 Activity 1 Years 7-12 WHAT IS TAX AND WHY

DO WE NEED IT? Fact sheet The materials in Tax 101 have been designed to be used in a variety of ways. Each topic is designed as a stand-alone section to be explored by a whole class, small groups or Tax 101 explores the reasons tax is collected and individual students. examines how governments use tax to provide services needed by thethe community, ATO. and the role of WHAT IS TAX?

Tax is the money paid by individuals and businesses to government: federal, state or territory, and local. There are three levels of government in Australia; the Australian Government (also known as the federal government), state and territory governments, and local governments. These governments use their tax revenue to provide public goods and services needed by the community.

WHY PAY TAX?

Governments need to fund the services they provide to the community, such as education, health, defence and infrastructure such as roads. To do this they must collect money, which is called revenue, through the tax system.

Without taxes, the government would have no money to provide services. Without taxes, we would live in a very different society.

If asked whether it would be a good idea to get rid of taxes, most people would pr would mean that people had more money of their own to spend. But how would theobably gover answer 'yes'. Paying less tax roads, hospitals and schools? Who would fund police, jails and defence services? Some peoplenment arebuild unable and maintainto earn an income. Without tax, the government would be unable to provide pensions, unemployment benefits or the Y Allowance. outh

Who pays tax? Tax is collected (levied) from individuals and businesses. The amount of tax levied is generally based on the amount spent on certain items or the level of income or profit.

„„ When individuals earn income – wages, commission etc – they pay income tax. „„ A goods and services tax (GST) is included in the price of most goods and services. „„ Companies pay company tax, an income tax on profits. „„ Sole trader businesses pay income tax on their profits.

Taxes shift resources from individuals and businesses to the government. Government spending transfers these resources to other individuals, businesses and or ganisations. The combined effect of taxes and government spending has an important impact on income distribution in Australia.

Page 1 Activity 1: Fact sheet Ta x , Super+You. Take Control.

WHO COLLECTS TAX?

In Australia there are three levels of government – Australian, state and territory, and local. Each has the right to collect taxes. „„ The Australian Government collects the most What factors influence revenue. On average, each year more than 80% of tax revenue comes from taxes such as income the amount and type of tax, the Medicare levy, the goods and services tax tax we pay? (GST), company tax, and excise duty. „„ State or territory governments annually collect approximately 16% of total tax revenue from taxes such as payroll tax, stamp duty and land tax. „„ Local governments in the same period collect about 3% of total tax revenue, largely from rates charged on the owners of property. „„ GST, which is spent by the states and territories, is collected on their behalf by the Australian Government.

WHO SHOULD PAY TAX?

In general, the government believes the level of wealth and income should be taken into account in determining who pays tax and the amount they should pay.

The Australian Government has decided that some groups in the community do not have to pay income tax. For example:

„„ individuals who earn less than $18,200 per year generally do not need to pay any tax. This amount is called the tax-free threshold „„ people who receive certain pensions, such as the disability pension, do not need to pay any tax on these pensions because this income is classed as tax exempt „„ a number of religious, charitable, scientific and educational organisations are exempt from paying tax.

Another factor to consider when deciding who should pay taxes, is to consider who benefits from the tax being collected. For example, passengers on a bus, motorists and the transport industry all benefit by using roads funded by taxes.

Taxes are also levied to discourage the consumption or use of certain products such as cigarettes and alcohol. Offering tax breaks for using renewable energy or alternative fuels are based on a desire to reduce the environmental impact of non-renewable energy sources, such as coal and oil.

Page 2 Activity 1: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Activity 1: What is tax and why do we need it Years 7-10 TASK 1 KNOWING ABOUT TAX Worksheet YOU WILL: YOU WILL NEED:

„„ identify your existing knowledge about tax-related issues „„ Fact Sheet: What is tax and why do we need it „„ consider your attitude about tax EXPLORE YOUR KNOWLEDGE AND ATTITUDES

1. In pairs, brainstorm what you know about tax and record it in the diagram below.

2. On the continuum, rate how you value the need to know about tax? (one is the lowest value and 5 is the highest value)

1 5

3. Get started on Tax 101: Go online and view „„ Read Fact sheet: What is tax and why do we need it? the video ‘The story of „„ Use the fact sheet information to confirm your current knowledge. tax’ at: https://www. „„ Keep this page for the end of the module so you can reflect on your taxsuperandyou.gov.au/ changing knowledge and values. story-of-tax

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Tax 101 Years 7-10 INTERACTIVE Fact sheet THE STORY OF TAX

The idea of tax has been around since ancient times. Soon after people stopped living as nomads and started to settle in large communities, it became clear that funds would be needed to obtain the things that everyone needed, but no one could achieve on their own. Things like bridges, roads and fresh water.

That's essentially what taxation is – money collected by the leaders of a community to pay for goods and services the whole community needs.

Although societies have become more complex since ancient times, the basic idea of tax has stayed pretty much the same. In Australia, the first taxes were raised in Colonial times to help pay for a Sydney gaol and to provide for the colony's orphans.

Today, tax is collected by three levels of government; local, state and federal. The money – called revenue – is then used to fund public goods and services, like schools and student loans, age pensions, defence force personnel and equipment, fresh water, TAX HAPPENS roads and bridges. Also national parks and sports facilities, rescue services, medicine and emergency health care. As humans settled into communities and began to develop complex societies, it became clear that large groups living together create a Some things you might never have imagined are paid for with wide range of needs, roles and opportunities – well beyond deciding taxation revenue. Like bush regeneration, music and arts who does the dishes or takes out the garbage! festivals and even the fireworks on New Year's Eve. To pay for the things people need, things that no one person can provide, taxes are levied so everyone can contribute something for the greater good. Taxes help provide infrastructure such as roads, bridges and legal tender, and public services such as police, hospitals and schools.

Taxes have been part of the conversation for longer than you may think.

Consider the following quotes:

„„ 'And the silver and the gold [he] gave to Pharaoh. Only he taxed the land … according to each one's individual tax rate he exacted the silver and the gold.' (2 Kings 23:35) circa 608 BC „„ 'But in this world nothing can be said to be certain, except death and taxes.' (Benjamin Franklin 1789) „„ 'Australians value their tax and superannuation systems as community assets, where willing participation is recognised as good citizenship.' (Michael D'Ascenzo, Australian Commissioner of Taxation, 2010)

Throughout history, tax has been levied on some very diverse items including drinking water, beehives, beards (feudal Russia), cooking oil (ancient Egypt) and the flushing of toilets (Maryland, USA, 2004).

Page 4 The Story of Tax: Fact sheet Ta x , Super+You. Take Control. TAX DEFINED

Tax is the 'contribution to government revenue compulsorily levied on individuals, property, businesses, goods, etc'. In modern taxation systems, taxes are paid with money, but this has not always been the case. Some communities used the unpaid labour of their citizens as a way of creating community services or infrastructure.

In Australia, tax is collected from individuals and businesses, and the amount of tax levied is generally based on the amount spent on certain items or the level of income or profit. TAX IN EARLY AUSTRALIA TAX OVER TIME Customs and excise duties formed the basis of taxes raised in When the first taxes were levied in communities, it could be Australia's colonies, with duties placed on major export products argued that their main purpose was to raise revenue to provide such as timber, wool, seal and whale oil, and seal skins. These services for those communities. The system could be said to duties were easy to collect because of the limited number of reflect the values of that community when deciding who pays wharves in existence. The revenue was spent on things likely to taxes, how much they will pay and how those taxes will be spent. garner support from the public such as an orphanage, hospital equipment and building works in Sydney. Over time, these communal values shift. For example, in feudal times the warrior nobility were supported by the labour and food The gold rush, which began in Australia in 1851, made demands of the poor; modern social security systems are intended to on infrastructure as thousands poured into the colonies and also support those in need. Some societies have also used 'sin taxes' offered a new opportunity for governments to raise revenue, as to affect individual behaviour. Examples of this include levying many individuals found gold. However, the implementation of higher taxes on alcohol and cigarettes to discourage excessive a miner's licence was regarded as a form of taxation without drinking and smoking. representation and this led to the Eureka Stockade and significant changes in Australian history. However, the main aim of taxation systems in countries such as Australia remains the provision of goods and services for the One of the main points of debate prior to Federation centred on benefit of the community. the imposition of tariffs. The colonies of Victoria and Western Australia relied heavily on customs duties and tariffs, whereas New South Wales proudly declared itself a free-trade colony. TAX FUNDS WHAT? While Federation in 1901 ended the need for customs booths on the borders of each colony in Australia, this economic debate The scope of what taxation revenue supports is wide and varied. had a strong influence in the early years of the new nation. oads We expect governments to provide health care, education, r and bridges, and a legal system as basic necessities. But in recent years, taxation revenue has also supported: TAX TYPES omontory „„ $3.8 million for visitor facilities in Wilsons Pr The Commonwealth of Australia Constitution Act established National Park a federal system of government when it created the nation of „„ $250,000 to develop a business case for sporting hubs Australia in 1901. The Act distributes lawmaking powers between „„ $1 million for a facility for high-tech businesses on the Gold the national government and the states and territories. Coast Each level of government imposes different types of taxes and „„ $2.1 million to the Australian Institute for ogram to help small and charges. During World War II the Commonwealth Government Commercialisation's TechFast pr took over all responsibilities for income tax and this has medium enterprises improve business performance and remained the major source of federal tax revenue ever since. remain competitive atch „„ $137,000 for the Moreton Bay Community Seagrass W Australians expect their governments to provide certain goods Program and services. Each of the three levels of government has „„ $13,545 towards the purchase of equipment for the responsibility for providing some of these goods and services. Argentine Tango dancing community in Perth For example, the Australian Government has responsibility for ogram „„ $2.1 million under the Regional Electrical Access Pr defence and immigration, the state or territory governments (REAP) to boost the power supply for businesses in are responsible for water, electricity and the police, and Gippsland. local governments take significant responsibility for waste management and local community services.

Page 5 The Story of Tax: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Years 7-10 TASK 1 INTERACTIVE THE STORY OF TAX Worksheet YOU WILL: YOU WILL NEED:

„„ research historical events associated with tax and analyse „„ Fact Sheet: Interactive - The story of tax its causes, effects and historical significance „„ library resource access or digital devices (class or after- „„ identify and reflect on values that underpin the Australian school access) taxation system „„ describe the link between the effectiveness of the tax system and the enrichment of the community RESEARCH

Tax has played a significant role in the histories of many communities. Some significant tax events include: „„ the Eureka Stockade (Australia) „„ Gandhi's Salt Satyagraha (India) „„ the Boston Tea Party (USA) „„ the Opium Wars (China) „„ the Whisky Rebellion (USA) „„ Lady Godiva (UK) „„ Flatulence tax (New Zealand) „„ protectionism versus free trade in pre-Federation Australia. RESEARCH EVENTS

1. Individually, conduct a fast search of historical events associated with tax in one of the societies or developments in the period of history you are studying. Choose from the following list: „„ A society from the ancient world in the Mediterranean or Asia (60 000 BC (BCE) – c.650 AD (CE) „„ An empire, society or development between c.650 AD (CE) – 1750 „„ A development or society between 1750-1918 „„ A development in Australia between 1918- present

2. Select ONE of these events and research the following: „„ Reasons for the tax event (for example, why was the tax introduced or what caused the reaction to tax?) „„ The intended and unintended consequences of the tax or tax event „„ The historical significance of the tax or tax event

3. Use library resources or use a digital device in class or after class time. Things to consider:

„„ If you are using devices in class, this can be done as a group search. If doing research in the library or after class, bring your facts list to class. „„ Wikipedia has some fascinating examples of historical events that originated as tax revolts. Search Wikipedia using the term 'history of tax resistance'. The results of your research could be displayed on a class wiki entitled 'Tax and history'. (Be aware that some sources of wiki information are not checked by experts). EVALUATE VALUES Our tax system is a reflection of our community values. In 2010, Michael D'Ascenzo, Commissioner of Taxation, stated: Australians value their tax and superannuation systems as community assets, where willing participation is recognised as good citizenship.

Page 6 The Story of Tax: Task 1 Ta x , Super+You. Take Control.

4. In groups, consider the kinds of values that are being expressed through Australia's system of tax. Start by discussing the nine values in 'Values for Australian schooling':

Honesty and trustworthiness Care and compassion Integrity

Freedom Understanding, tolerance and inclusion Doing your best Respect Fair go Responsibility

MAKE CONNECTIONS AND CONCLUSIONS

Group discussion:

5. How might each of these values influence how the tax system works?

6. Identify seven values (from the list above or from your discussion) that you think underpin Australia's tax system.

7. Arrange them in a shape that shows which values you believe are the strongest influence on our tax system to the least strong. (Note that using a diamond shape is often effective.)

Individually 8. In your view, are these the best values for our tax system? Create a new design, which reflects your view of the most important underpinning values of an effective tax system.

Page 7 The Story of Tax: Task 1 Ta x , Super+You. Take Control.

Tax 101 Activity 2 Years 7-12 WHO, WHAT,

HOW AND WHY Fact sheet

How do we work out what is a fair amount of tax to pay? • Is it fair that everyone, regardless of Different types of taxes affect their income and expenses, should taxpayers in different ways. pay the same amount of tax? • Is it fair if those who earn the most pay the most tax? • What is a fair amount of tax TYPES OF TAXES AND CHARGES for people who use community resources? Taxes can only be collected if a law has been passed to permit their collection. The Commonwealth of Australia Constitution Act established a federal system of government when it created TAX STRUCTURES the nation of Australia in 1901. It distributes law-making powers between the national government and the states and territories. There are three tax structures used in Australia:

Each level of government imposes different types of taxes and „„ Proportional taxes: the same percentage is levied, charges. During World War II the Australian Government took regardless of the level of income. Company tax is a over all responsibilities for income tax and it has remained the proportional tax as the same rate applies for all companies, major source of federal tax revenue ever since. regardless of the profit earned. „„ Progressive taxes: the higher the income, the higher Levels of government and their taxes the percentage of tax paid. Income tax for individuals is a Federal progressive tax. State or territory Local (Australian/Commonwealth) „„ Regressive taxes: the same dollar amount of tax is paid, Income tax Payroll tax Property rates regardless of the level of income. The departure levy on Medicare levy Stamp duty Rubbish disposal passengers at airports is a regressive tax. charges Company tax Land tax Some community organisations are exempt from income tax and Building permits Goods and services tax (GST) Special purpose some low-income individuals do not have to pay tax. Fringe benefits tax (FBT) levies Fines Some people argue that regressive taxes are unfair because Capital gains tax (CGT) Taxes on gambling Animal licences for pets they charge the same amount whatever a person's income or Customs duty on imports capacity to pay. Other people argue that this is not necessarily Excise on fuels, tobacco and so, because a regressive tax may be levied on an item bought other goods only by wealthier taxpayers. This is the case, they say, with the Departure tax at airports luxury tax on more expensive vehicles. Petroleum resource rent tax Special purpose levies Some taxes discourage consumption of specific goods or services, for example taxes on tobacco and alcohol. Fuel taxes Tax information is recorded on a wide variety of documents. are designed to encourage people to use fuel-efficient vehicles Examples include: and equipment.

„„ your payslip from work, which will show how much income Other taxes ensure people contribute towards government tax has been deducted from your pay services such as collecting the garbage, maintaining roads and „„ a sales invoice from a clothing store, which includes GST enforcing the speed limits. „ „ a rate notice for your family home When considering a tax, an important decision has to be made „ „ an invoice or receipt for sale of a motor vehicle as to whether the type of the tax will be proportional, progressive „ „ a pet registration receipt. or regressive.

Page 8 Activity 2: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Activity 2: Who, what, how and why Years 7-10 TASK 1 TYPES OF TAXES Worksheet YOU WILL: YOU WILL NEED:

„„ correctly use and interpret terminology about different types „„ Fact Sheet: Tax – Who, what, how and why of taxes „„ Answer sheet: Type of taxes „„ identify and classify a range of different taxes that people pay „„ analyse statistical data representations to make conclusions about the effects of different types of taxes on taxpayers TEST YOUR KNOWLEDGE

1. Read Fact Sheet – Tax: Who, what, how and why. Highlight or circle new terms and important ideas about tax.

2. Tax information is recorded on a wide variety of documents. Identify which level of government would collect the tax from these five documents? (federal, state or territory, local)

Federal State/Territory Local

Your payslip from work, which will show how much income tax has been deducted from your pay

A sales invoice from a clothing store, which includes GST

A rate notice for your family home

A receipt for sale of a motor vehicle, which includes motor vehicle duty and GST

A pet registration receipt

Proportional tax The same percentage is levied, regardless of the level of income. Company tax is a proportional tax as the same rate applies for all companies, regardless of the profit earned.

Company tax Explore the proportional tax paid by three companies on their taxable income. The data in Table 1 shows the tax paid by companies on their taxable income. Taxable income is what is left when assessable income has been reduced by all allowable deductions.

Table 1

Company tax Company A Company B Company C

Taxable income ($) 20,000 100,000 300,000

Company tax ($) at the same 5,200 26,000 78,000 rate at 26%

Page 9 Activity 2: Task 1 Ta x , Super+You. Take Control.

Examine the charts showing company tax information. Choose ONE answer for the questions:

26% 26% 26%

74% 74% 74%

3. What happens to the tax slice on the pie graph as the companies make more money?

™™ The proportion increases. ™™ The proportion decreases. ™™ The proportion stays the same.

4. What happens to the amount of tax paid as the companies make more money?

™™ The amount of tax paid increases. ™™ The amount of tax decreases. ™™ The amount of tax stays the same.

5. Why do you think the government requires companies to pay a higher amount of tax as their profit increases even though the rate of tax is the same for all companies?

Goods and services tax (GST) Another example of a proportional tax structure is the goods and services tax (GST). The GST rate is set by the Australian Government at 10% which is added to the cost of most goods and services. This means that 1/11th of final sale price is GST.

6. Work out the amount of GST that would be charged on the following items.

Item purchased Cost of item ($) Cost with GST Toy truck 20 Try the online interactive Concert ticket 150 “Tax models” at: https://www. taxsuperandyou.gov.au/shaping- Camera 1,000 the-system Refrigerator 3,000 Go online

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Progressive tax The higher the income, the higher the percentage of tax paid.

The activity below is based on an example of a progressive tax structure. Table 2 shows the amount of tax paid by four taxpayers who have different levels of income.

Table 2 Taxpayer A Taxpayer B Taxpayer C Taxpayer D

Taxable income ($) 10,000 35,000 50,000 95,000

Income tax (tax paid to nearest dollar) 0 2,747 7,547 23,732

Tax as percentage of taxable income NA 7.8% 15.1% 25%

Choose ONE answer for the question below:

7. What happens to the rate or proportion of tax paid as a person earns a higher income?

™™ The proportion stays the same. ™™ The proportion decreases. ™™ The proportion increases.

8. Personal income tax is an example of a progressive tax in Australia. It provides a major source of revenue for the Australian Government. Why do you think governments introduced and retain a progressive income tax structure?

Regressive tax The same dollar amount of tax is paid, regardless of the level of income.

Study the four examples that illustrate how a regressive tax works and affects people:

Car registration fees are a type of tax, which is regressive. Four friends must all pay their annual car registration fee of $650 in the same month. Table 3 outlines each person's circumstances. This regressive tax costs each person the same, except for Bill who is retired, because the car registration authority charges retirees half the required tax amount.*

Table 3 Pauline Andrew Richard Bill

Circumstances Part-time secretary Office worker Entrepreneur Retiree

Total annual income $28,500 $47,000 $92,500 $18,961

Car rego $650 $650 $650 $325

As a percentage of their income 2.28% 1.38% 0.70% 1.71%

* Note: This example of a regressive tax concentrates on examining the main impact of the tax, and a lot of detail has been simplified and removed. It does not invalidate the conclusions we can draw from the example.

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While Pauline, Andrew and Richard pay the same registration fee, this fee is a different percentage of their income, depending on how much they earn. The charts show this as percentages:

Observe what happens to the tax slice as the charge becomes a smaller proportion relative to the taxpayer's income. TEST WHAT YOU HAVE LEARNED

Choose ONE answer for the questions below:

9. Vehicle registration fee is the dollar amount paid to state or territory government to register your vehicle. What type of tax is this?

™™ Progressive ™™ Regressive ™™ Proportional

10. Departure tax on overseas travellers is the dollar amount of tax paid by people leaving Australia for overseas. What type of tax is this?

™™ Progressive ™™ Proportional ™™ Regressive

11. Goods and services tax (GST) is a 10% tax levied on the supply of most goods or services consumed in Australia. What type of tax is this?

™™ Proportional ™™ Progressive ™™ Regressive

12. Customs duty is tax of a certain percentage of value of goods imported into Australia. What type of tax is this?

™™ Progressive ™™ Regressive ™™ Proportional

13. Personal income tax is the tax paid by persons on their taxable income. What type of tax is this?

™™ Regressive ™™ Proportional ™™ Progressive

14. Medicare levy is a tax of a set percentage paid by taxpayers to cover some of the cost of the public health system. What type of tax is this?

Page 12 Activity 2: Task 1 Ta x , Super+You. Take Control.

Tax 101 Activity 2: Who, what, how and why Years 7-10 TASK 2 TYPES OF TAXES REVISITED – WHAT’S FAIR? Worksheet YOU WILL: YOU WILL NEED:

„„ organise information to convey understanding about types „„ Fact Sheet: Tax – Who, what, how and why of taxes and their effect on taxpayers „„ Answer sheet: Task 2 - Types of taxes revisited – what’s fair? „„ informally debate with others about the fairness of some taxes „„ large sheet of paper „„ make conclusions about the role of fairness in the design of tax

APPLY YOUR KNOWLEDGE

With your group: Ethical tax topic 1: 1. To do Task 2, refer to Fact sheet: Tax – Who, what, how and why and your notes on Worksheet: Types of tax. Which groups are ‘tax-exempt’? Why?

2. Create a diagram or representation that shows information Which individuals do not have to pay tax? Why? about the three types of taxes. Show: What factors might be used to determine whether an „„ types of tax individual or group of people may not have to pay tax? „„ definitions of types of tax „„ examples of types of tax Ethical tax topic 2: „„ how a type of tax affects the proportion of tax paid by Why do some people argue that regressive taxes are taxpayers. unfair while others say they are fair? 3. Display your representation for class viewing. Ethical tax topic 3: „„ Be ready to be randomly chosen to explain your representation. What taxes discourage consumption of specific goods „„ Seek feedback from your audience about the accuracy and services? of your group’s information and the usefulness of the What taxes are designed to encourage behaviour? representation. Do you think such management of public behaviour is DEVELOP CONCLUSIONS acceptable? Ethical tax topic 4: What’s fair about different taxes? Why do you think there is such a variety of taxes and With your group: types of taxes in Australia?

4. To reach some conclusions about the role of fairness in the Should the tax system be simplified? design of tax: Would it be easier to have one type of tax only? „„ choose an ethical tax topic „„ discuss how fairness is a factor in the design of a tax Ethical tax topic 5: „ „ be prepared to be randomly chosen to share your What is the fairest type of tax? group’s conclusions. For who?

Why do you think this?

Page 13 Activity 2: Task 2 Ta x , Super+You. Take Control. EVALUATE POINTS OF VIEW

How fair are different taxes? Independently:

5. Reflect on the different points of view you have gained about the fairness of taxes.

6. Now, consider some issues on your own. Use the graphic organiser below to evaluate the factors associated with the fairness of three taxes. Provide your own third example.

Fair Unfair It doesn’t affect the lower income Luxury car earners because they don’t buy luxuries.

Cigarettes Fair Unfair

Fair Unfair Other item

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Tax 101 Activity 3 Years 7-12 HOW IS TAX

REVENUE SPENT? Fact sheet TAX REVENUE

Australians expect their governments to provide certain goods and services. Each of the three levels of government has responsibility for providing some of these goods and services. Governments pay for these from taxation revenue.

Services provided by the three levels of Australian government Federal State or territory Local (Australian/Commonwealth) Family and community services Social security and welfare, family Health payments Education Aged and disability services

Defence Water and electricity Recreation and culture

Health, ageing and community Transport, roads and Waste management services communications Street and traffic management

Education Public order and safety − police Local infrastructure services

Immigration The court system Business and economic services

Trade Art, culture and sports Roads and bridges

Postage and communications Environment Administration costs for the local Currency Administration costs to run state or council Transport territory government departments

Subsidies and grants to state or Subsidies and grants to local territory and local governments government

Administration costs to run federal government departments

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Tax 101 Activity 3: How is tax revenue spent? Years 7-10 TASK 1 TAX REVENUE AND MY COMMUNITY Worksheet YOU WILL: YOU WILL NEED:

„„ locate, sort and represent information from a range of „„ Fact Sheet: How is tax revenue spent? sources about government services and spending „„ large paper sheets „„ identify interconnections between government services, the economy and society „„ predict consequences associated with government spending RESEARCH

Government services across Australia In groups:

1. Brainstorm a list of sources that would reveal a comprehensive list of government services at the local, state/territory, and federal levels.

2. Locate some of these sources. Find three different services provided by governments:

Examples of services provided by the three levels of Australian government

Federal (Australian/Commonwealth) State or territory Local

3. Explore one major government service area, for example, transport or environment.

„„ Use your information sources to create a comprehensive list of services associated with that area. „„ Present lists to other groups. ANALYSE EVIDENCE

Government services in the community 4. Analyse evidence of government spending in your local area:

„„ Locate tangible evidence of government goods and services in your local area. For example, create a wall of photos from your local area or study a street directory which shows all community facilities. „„ Analyse some items as evidence of something more complex. For example, power poles are evidence of an energy system that connects mines, dams, power stations and more. „„ Create some concept maps that show your analyses. „„ Label the elements on your concept maps as being the responsibility of the federal, state/territory or local government.

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5. Discuss the patterns you observed in government spending in your local area:

„„ How many services are evident? „„ Are these mostly local, state/territory or federal services? „„ What variety of services is there? „„ For what services are more than one level of government responsible? „„ What factors lie behind these patterns?

Evidence of government funding in the community In groups:

6. Analyse the news media for evidence of government funding in your community:

„„ Bring a recent newspaper to class or find a reliable news source online. „„ Survey the news source to find examples of where various levels of government may be providing services. Look at advertisements, the classifieds and news stories for examples. COMMUNICATE

7. Plan a way to represent the findings of your survey. Include:

„„ the broad categories of services „„ which levels of government „„ what type of spending is occurring (for example, a new development) „„ reasons for the government spending „„ other information of relevance or interest.

8. Share your recorded findings. MAKE PREDICTIONS AND CONCLUSIONS

The impact of government services 9. Communities benefit from tax revenue. To understand the value of government services on the community, imagine a service being withdrawn. Use a Consequence Wheel to predict possible effects:

„„ Copy the consequence wheel below on a large piece of paper. „„ Identify one government service from your investigations and add to the inner-most circle. „„ Consider the possible effects on your community if the service government withdrew that service (immediate and short- withdrawn: term). Write these in the first inner circle. „„ Predict possible consequences of these effects (social, economic, environmental, financial)?Write in the next inner circle. „„ Would all members of the community be affected in the same way? Would this create more consequences? (long term)? Write in the next inner circle. „„ Create more consequence circles if needed.

10. Draw a conclusion: Write a statement about the use of tax revenue by governments in Australia: Try this onlineGo online interactive quiz about services provided by the three levels of government. https://www.taxsuperandyou.gov. au/tax-in-your-community

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Tax 101 Interactive - Shaping the system Years 7-10 TAX MODELS Fact sheet

Explore the types of taxes that contribute to Australia's revenue and consider what this 'tax landscape' might look like if alternative tax systems or schemes were applied.

There are many forms of taxation in Australia. Individuals and businesses in Australia may be required to pay taxes or charges to all levels of government: local, state and territory, and federal. Taxes are collected to pay for services to benefit you and the rest of Australia.

Different tax models create different ‘tax landscapes’. Each model impacts on society in a different way. A tax model might involve:

„„ everyone paying a flat rate of tax at 10%, no matter how they earn – an example of proportional tax „„ no one pays income tax and other taxes support the funding of community services „„ no GST on goods and services „„ increasing import/export duty.

Australia’s current tax model involves a mix of taxes. When changes are proposed, social factors are applied to tax models to understand the impacts, for example, whether it maintain the same level of services, who might benefit, and who might pay more, or less.

Over the past two centuries, Australia's tax system has been shaped by a multitude of historical events, policies and government decisions. Australia's tax system has altered and expanded at different stages of our country's development and continues to be shaped by our democratic processes.

All tax systems, no matter what their structure, can have significant impacts both on the economy and population. The key to a fair and effective system is balance. Achieving this balance is a difficult and ongoing task, forming one of the key responsibilities of all levels of government.

Page 18 Tax Models: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Interactive - Shaping the system Years 7-10 TAX MODELS Worksheet YOU WILL: YOU WILL NEED:

„„ analyse information and data to understand the relationship „„ Fact Sheet: Interactive - Shaping the system - Tax models between parts of a tax model „„ Answer Sheet: Shaping the system – Tax models „„ make predictions about the consequences of changing aspects of a tax model ANALYSE INFORMATION AND PREDICT CONSEQUENCES

Scenario quiz Your task is to play the quiz. In groups, you will analyse different tax model scenarios and predict the consequences:

„„ on other taxes „„ for different groups in society „„ for overall tax revenue to service the community.

1. Study the Fact sheet: Interactive - Shaping the System - Tax models

2. Appoint a group chairperson to lead the following process (change chairpersons for each question).

Group chairperson’s task:

„„ For each tax model scenario, read the introduction and question. „„ Join in with the group to discuss and predict the consequences for the scenario. „„ When complete, read the answer and explanation to the group. „„ Ask the group to compare their predictions with those described in the explanation.

What if this 'tax landscape' were to change? What if we applied a different taxation model to our Who might society but still had to maintain benefit? the same level of services?

Who might pay more or less?

Page 19 Tax Models: Worksheet Ta x , Super+You. Take Control.

Tax model scenario 1: A flat rate of tax With a flat 10% rate of tax for individuals, everyone pays tax at the same rate on all of their income no matter how much they earn. This is an example of a proportional tax.

What if we applied this taxation model to our society but still had to maintain the same level of services? Select ONE answer:

a. With a flat 10% rate of tax for individuals, many people who currently pay no individual income tax would have to start paying it. b. With a flat 10% rate of tax for individuals, higher income earners would be impacted the most through having to pay a higher rate of tax on all of their income. c. With a flat 10% rate of tax for individuals, middle-income earners would need to receive higher government benefits to compensate for their reduced disposable income.

Tax model scenario 2: No individual income tax Income tax makes up over 40% of all the revenue collected in Australia - so it is funding a large proportion of the services we see around us.

What if we applied this taxation model to our society but still had to maintain the same level of services? Select ONE answer:

a. If we removed income tax for individuals, salaries would have to be increased to allow for the reduction in disposable income.

b. If we removed income tax for individuals, the overall level of revenue collection would not change significantly.

c. If we removed income tax for individuals, most people would have more disposable income to spend on general consumer goods and luxury items.

Tax model scenario 3: No GST The goods and services tax is collected from Australians when they purchase most of their goods and services. The net revenue from this collection is passed to the state and territory governments to fund the services they provide.

What if we applied this taxation model to our society but still had to maintain the same level of services? Select ONE answer.

a. If there was no goods and services tax, the state and territory governments would need to adjust for the loss of the major source of funding for their projects and the various community services they provide.

b. If there was no goods and services tax, the state and territory governments would be able to increase their investments in projects and the various community services they provide.

c. If there was no goods and services tax, pensioners would have to pay much more for many of the services they receive from the government.

Tax model scenario 4: Increased import/export duty Import duty affects the cost of goods and services that are brought into Australia and export duty affects the cost of selling Australian goods and services overseas.

What if we applied this taxation model to our society but still had to maintain the same level of services? Select ONE answer.

a. If Australia increases its import and export duty, Australia would see a dramatic increase in the importation of expensive goods coming from overseas and it would reduce manufacturing in Australia.

b. If Australia increases its import and export duty, goods imported into Australia would be more expensive to buy.

c. If Australia increases its import and export duty, Australian mining companies would need to substantially increase production rates to cope with increased demand for resources from overseas.

Try this onlineGo online interactive quiz about services provided by the three levels of government. https://www.taxsuperandyou.gov. au/tax-in-your-community

Page 20 Tax Models: Worksheet Ta x , Super+You. Take Control.

Tax 101 Activity 4 Years 7-12 THE BUDGET – Fact sheet TAXES AND SPENDING TAXATION AND SPENDING: 2020–21

Even with the best of planning, budgets can be challenged by events such as natural disasters, which can destroy The government’s annual Budget shows infrastructure and stop economic and social activity for a period how tax revenue is collected and how it of time. Natural disasters require an increase in spending, both will be spent. Pressures on the Budget directly and indirectly, while also creating a reduction in tax can impact on the type and amount of revenue. These two factors have an effect on the Budget. taxes that are levied. If there is not enough revenue to cover all of the proposed spending, then decisions have to be made about how to solve the problem. THE BUDGET The government could decide on one of the following options: 1. Cut spending so that revenue will cover expenditure. This Every year, each level of government is required to prepare a raises questions, such as which services should be cut and budget to show how tax revenue will be collected (or 'raised') how the community will be affected. and how it will be spent. The Australian Federal Budget provides a well-known example of this process. 2. Increase taxes to allow spending to remain at the desired level. Who will pay the increased taxes? What type of taxes The Australian Federal Budget is prepared by the Treasurer and should be increased? presented to parliament. After the Budget has been debated and approved by both Houses of Parliament, taxes are collected in 3. Keep taxes and spending as they are and borrow the money line with the Budget. The Parliament decides on the levels of tax needed to cover the deficit (or shortfall). How will this money – not the Australian Taxation Office (ATO). be repaid? What effect will the repayments have on the future levels of services? The first pie chart shows the revenue ('budget income') collected through various types of taxes. The second chart shows how the 4. Sell national assets to increase revenue. This is sometimes revenue is spent by the government ('budget expenditure'). done to pay back past government borrowings.

Income tax from individuals makes up 47% of the Australian 5. The government may raise more income than it planned Federal Budget income. The charts illustrate the major sources to spend (a surplus budget). In these circumstances, the of revenue for the Australian Government and how the taxation government could change its decisions about how the tax revenue is spent. revenue would be spent.

Page 21 Activity 4: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Activity 4: The budget – taxes and spending Years 7-10 TASK 1 MANAGING DISASTERS Worksheet YOU WILL: YOU WILL NEED:

„„ locate information about natural disasters and the effect on „„ Fact Sheet: The budget – taxes and spending government budgets „„ speaker’s prop such as a soft ball „„ identify and infer immediate, short-term and long-term „„ library resource access or digital devices (class or after- effects of a disaster on a community, economy and school access) environment „„ consider how budgets prioritise needs INVESTIGATE CONSEQUENCES

Effects of natural disasters Investigate the impact of unexpected events such as a major natural disaster on the government’s Budget:

1. Identify a recent disaster (natural or human).

2. Using the internet, research the recent disaster and its consequent impact on the Budget.

„„ Enter 'natural disasters in Australia' into a search engine to search for resources. „„ Entering 'effect of natural disasters on budget' into a search engine will provide recent material. „„ Note that some of the video content can be quite graphic.

3. Identify which levels of government would be affected? In what way? (refer toActivity 3: Fact sheet and Activity 3 Worksheet)

4. Using information from your research, infer some immediate, short-term and long-term effects of the disaster on tax revenue.

5. Represent these on a consequence wheel similar to the one below.

Natural disaster

Page 22 Activity 4: Task 1 Ta x , Super+You. Take Control.

Managing revenue and budget consequence roleplay 6. Read Fact Sheet: The budget – taxes and spending

„„ With the class, choose one of the natural disasters and discuss the consequences for people, the economy, the environment, and the government. „„ Study these stimulus words to prepare you for the consequence game:

expenditure tax revenue budget long-term effect, long-term expenditure short-term effect, short-term expenditure immediate effect, immediate expenditure community environment economy

7. Play the consequence game using the following dialogue model: Consequence game overview ¦¦ In your group, sit on one side of the table or the other, Budget team: states a community need one side being ‘Government Revenue’ team and the Revenue team: asks if the need is an immediate, short-term or other side ‘Government budget’ team. long-term need ¦¦ Starting on the budget side, one person takes the speaker’s prop and states a consequence of the natural Budget team: finesses their request disaster that needs funding. This person passes the prop Revenue team: decides if it is a high, medium or low priority; to a member of the other team. and identifies a source of money to fund the need ¦¦ The receiver asks whether the need requires immediate, short-term or long-term funding. The speaker then Budget team: responds to the decision using consequences to passes the prop to a member of the other team. justify their position ¦ ¦ The receiver responds to the question by refining the Revenue team: re-assess the decision if necessary request for the need. The speaker then passes the prop to a member of the other team. ¦¦ The receiver decides if the need is a high, medium or low priority and states which source of revenue will fund the need. The speaker then passes the prop to a member of the other team. Go online ¦ ¦ The other side accepts or argues the priority decision, View the video, ‘The Australian Taxation System’ using consequences to justify any request for a change to see how funds are raised and distributed by of decision. the Australian government: ¦¦ The revenue speaker re-assesses the decision if desired, being conscious of the limited number of https://www.taxsuperandyou.gov.au/shaping- priorities. The speaker then passes the prop to a the-system member of the other team. Try these online interactives about government ¦¦ The receiver states another consequence of the natural services, revenue and budgeting: disaster that needs funding. Tax in your community: ¦¦ And the process is repeated, being aware of the rules. https://www.taxsuperandyou.gov.au/tax-in-your- Rules: community Each player will have at least one opportunity to speak. You make the decision: There can be no more than two high priorities and two https://www.taxsuperandyou.gov.au/you-make- low priorities. the-decision Therefore, as the game progresses, previous consequences must be factored into the answers.

Page 23 Activity 4: Task 1 Ta x , Super+You. Take Control.

Tax 101 Years 7-10 INTERACTIVE TAX Fact sheet IN YOUR COMMUNITY

How is the community supported through taxes? Who funds what government service? What happens when disaster strikes a local area?

Local, state and territory, and Australian Government tax In Australia there are three levels of government:

„„ local „„ state and territory, and „„ Australian Government.

Each level of government has the right to collect taxes, and provides certain goods and services which are partly paid for using tax revenue. Community leaders, such as the Prime Minister, Premier or Mayor, must decide how to spend tax revenue. It is a challenging task, even more so when the community faces a crisis. Below is a scenario of a flood disaster. Read how the community is affected and what community leaders and their teams must consider to manage the crisis and help the community recover. 1. Problems caused by the floods Healthcare services Healthcare services are inundated with people injured in the SCENARIO: DEVASTATION IN GREENVILLE floods. Hospital beds are full. Patient numbers are expected to rise and health officials fear a disease epidemic because the A devastating flood has just swept through the city of Greenville, city's sewerage and fresh water systems have been damaged. destroying homes, businesses and infrastructure. Thousands of residents are homeless and critical services including power and 'We urgently need more ambulance vehicles and officers out on water have been disrupted. the roads. We can't keep up with the calls. The Prime Minister needs to bring in ambulance officers and vehicles from interstate.' Residents have called on the government to provide urgently needed services, accommodation and healthcare for flood Cost of addressing healthcare issues caused by the flood: victims, and to establish a recovery plan for the city. $15 million

The Greenville flood is so extensive that the state and local 2. Public housing governments don't have enough funds to rebuild. They must One-third of public housing was damaged in the floods and is move the city of Greenville's status from Crisis back to Stable in no longer fit for living in. As a result, the public shelters have three key areas: become overcrowded with desperate families. „„ community wellbeing 'We've had to find temporary accommodation for more than „„ the economy 4,000 families. Tonight we'll have 17,000 people sleeping on the „„ the environment. floors of schools, shopping centres and our local community To achieve this goal, they must reallocate tax revenue to address centres, including lots of small children. They don't cope with the problems caused by the flood. Therefore, they must: it terribly well, the little ones. It can't go on like this forever. The whole situation is chaos.' a. identify the problems caused by the floods b. consider ways to fund rebuilding work, and Cost of addressing public housing issues caused by the c. consider the effects of different funding models. flood: $23 million

Page 24 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control.

3. Roads 4. Courts Roads are in urgent need of repair. Flood damage No court buildings suffered significant damage in the floods. has made many bridges and causeways impassable, However, local courts are beginning to experience a wave hampering the recovery effort and leaving thousands of cases related to property disputes, insurance claims and of residents stranded. Feasibility studies will be looting offences. required to rebuild major roads in a way that makes 'Unfortunately, whenever there is a natural disaster, some them flood-proof. members within the community will seek to exploit the 'You just can't imagine the damage. In 30 years I've situation. I suspect the next 12 months will be a very never seen anything like it. There's a whole suburb busy time in the courts. We could certainly do with more of families over that bridge that can only be reached magistrates, legal secretaries and depositions clerks.' by air. They're stranded. We've already had to airlift a Cost of addressing pressure on courts caused by the pregnant woman out. We need earthmovers, rollers, flood: $11 million compactors and a dozen crews out here. Now.' caused by the Cost of addressing roadwork issues flood: $130 million

5. Parks and recreation 6. Defence Parks and walkways along the Greenville River remain A joint taskforce of boats, vehicles and personnel is working submerged. The banks of the river have collapsed in the centre around the clock to assist emergency services in the search of the city, making the riverbank treacherous. Hazardous and recovery effort, clearance of the Greenville River and playgrounds and sports fields will remain closed for up to three Greenville Bay shipping channels, and general cleaning up. months and some of the recreation centres are completely destroyed. 'We were recalled from an important training mission in Papua New Guinea. This clean-up is going to take months. 'I used to bring the kids down here after school. Now there's We will certainly need additional troops and materials to nowhere to take them. They have nowhere to play footy. They maintain our existing operational commitments throughout can't ride their bikes along the riverbank. I know the city is in a the world.' crisis but people still need somewhere to meet. Maybe even more so right now, to keep our spirits up.' Cost of supporting defence force flood: $22 million efforts to help with the Cost of repairing damage to parks and recreation facilities caused by the flood: $38 million

7. Schools A total of 55 primary and secondary schools across 8. Garbage and recycling Greenville have been closed due to flood damage. Engineers The flood has washed tonnes of garbage through the streets of estimate it will be eight weeks before the flood waters Greenville. This could easily become a serious health hazard if recede and safety checks can be conducted. There are a few it is not removed. With some roads closed due to flooding and schools that were completely destroyed. A further 10 schools damage, the city's head of waste engineering has identified have cancelled classes because they are being used as river barges and helicopters as the most effective methods of evacuation centres. transporting garbage. These are expensive options.

'We are one of the few schools still operating, so we've taken 'The garbage is piling up and there's no easy way of getting it in students from everywhere else. Despite this, there are shifted. With all the water lying around, the garbage will start to thousands of kids who still have nowhere to go, which means rot if we don't get it moved. Looks like we might even have to their parents can't return to work. We need hundreds of fly some of it out.' temporary classrooms, and we need them now.' Cost of increasing garbage and recycling services to Cost of building temporary classrooms and repairing overcome problems caused by the flood: $35 million damage to schools caused by the flood: $100 million

Page 25 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control. EMERGENCY RESPONSE BUDGET

Fixing all of Greenville's flood problems is going to cost $374 million. Roads: $130m Unfortunately, there is only $250 million available in emergency response Public housing: $23m funding. Leaders have six pre-defined budgets to choose from. Some Healthcare services: $15m budgets direct funding towards roads and health, others towards garbage Courts: $11m collection and defence. You've got some tough choices to make. Defence: $22m Schools: The total funding required to fix each problem is shown in the table to the right. $100m Garbage and recycling: $35m For example, to fix all of the roads will cost $130 million, and to fix the Parks and recreation: $38m hospital will cost $15 million.

Budget 1: even reductions across all sectors

Roads: $87m (out of $130m) Public housing: $15.4m (out of $23m) Healthcare services: $10m (out of $15m) Courts: $7.3m (out of $11m) Defence: $14.7m (out of $22m) Schools: $66.8m (out of $100m) Garbage and recycling: $23.4m (out of $35m) Parks and recreation: $25.4m (out of $38m)

Budget 2: roads and health

Roads: $125m (out of $130m) Public housing: $9.9m (out of $23m) Healthcare services: $15m (out of $15m) Courts: $6.3m (out of $11m) Defence: $10.4m (out of $22m) Schools: $56.8m (out of $100m) Garbage and recycling: $5m (out of $35m) Parks and recreation: $21.6m (out of $38m)

Page 26 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control.

Budget 3: roads and garbage

Roads: $120m (out of $130m) Public housing: $9.2m (out of $23m) Healthcare services: $4m (out of $15m) Courts: $5.4m (out of $11m) Defence: $8.8m (out of $22m) Schools: $49m (out of $100m) Garbage and recycling: $35m (out of $35m) Parks and recreation: $18.6m (out of $38m)

Budget 4: roads, health and garbage

Roads: $104m (out of $130m) Public housing: $12.5m (out of $23m) Healthcare services: $12m (out of $15m) Courts: $6m (out of $11m) Defence: $12m (out of $22m) Schools: $54.7m (out of $100m) Garbage and recycling: $28m (out of $35m) Parks and recreation: $20.8m (out of $38m)

Page 27 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control.

Budget 5: roads, health and garbage

Roads: $130m (out of $130m) Public housing: $8.3m (out of $23m) Healthcare services: $15m (out of $15m) Courts: $4m (out of $11m) Defence: $7.9m (out of $22m) Schools: $36.1m (out of $100m) Garbage and recycling: $35m (out of $35m) Parks and recreation: $13.7m (out of $38m)

Budget 6: roads, health and garbage

Roads: $117m (out of $130m) Public housing: $13.8m (out of $23m) Healthcare services: $13.5m (out of $15m) Courts: $4.5m (out of $11m) Defence: $13.2m (out of $22m) Schools: $41m (out of $100m) Garbage and recycling: $31.5m (out of $35m) Parks and recreation: $15.5 (out of $38m)

Page 28 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control. COMMUNITY REACTIONS TO THE BUDGET

Each budget produced a different reaction from Greenville's residents. This reaction is gauged through media reports and social media feeds.

Budget 1 THE GREENVILLE GAZETTE: PRIME MINISTER Social media response FAILS TO PRIORITISE Joe @ parktown 'The city's underwater and the Prime Minister Emergency budget cuts ordered by the Prime Minister have REDUCES health funding? Are you kidding me?' received a weak response from Greenville community leaders. The 'across the board' cuts reduced all funding streams by one Fiona @ 786 third, failing to direct money to priority services such as healthcare 'I'm glad schools managed to hang on to some of their and garbage collection. This timid approach has failed to fix the funding, but this money isn't going to fix anything.' city's problems and has left many questioning the Prime Minister's Greg @ doonside ability to make tough decisions during times of crisis. 'Looks like they're patching a few of the main roads up, which is good, but I can't get to them because the side streets are still blocked!'

Budget 2 THE GREENVILLE GAZETTE: HEALTH, ROADS Social media response BIG WINNERS Joe @ parktown 'Great to see the hospitals getting the nod, but the The Prime Minister has made drastic changes to Greenville's garbage around my property is getting out of control. budget, directing emergency funding to the city's hospitals and There are rats and flies everywhere.' roads in a bid to get the city operating as quickly as possible. While many have applauded this move, early feedback suggests Fiona @ 786 that too many cuts were made to other services such as garbage 'Our school is still closed and many of the families are collection, housing and defence. Refuse continues to pile up on forced to camp in our local gym. Who's looking after Greenville's streets and approximately 4,000 families remain in these people?' emergency accommodation throughout the city. Greg @ doonside 'I hear they're getting a few essential services sorted out, but from where I am the city still looks like a war zone. Come on, PM, you've got to do something!'

Budget 3 THE GREENVILLE GAZETTE: PM SLASHES Social media response HEALTHCARE Joe @ parktown 'You have got to be kidding me! Slash healthcare Drastic budget cuts enforced by the Prime Minister have enraged funding? Did the PM fail to notice the DISASTER Greenville residents, who claim the new funding model will only outside the window?' increase their suffering. Funding for healthcare was slashed, along with schools, housing and defence. Road repairs and Fiona @ 786 garbage collection were made priorities in what can only be 'Everyone's really scared. If disease breaks out or described as a desperate and rushed attempt to get the city someone gets injured, how are they going to be back on track. Many Greenville residents are now questioning treated? We need hospital funding now!' the Prime Minister's ability to manage the increasingly desperate Greg @ doonside situation now facing the city. 'Roads and garbage are one thing, but you've got to look at the big picture. The city needs leadership!'

Page 29 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control.

Budget 4 THE GREENVILLE GAZETTE: ADDITIONAL Social media response FUNDING NEEDED URGENTLY Joe @ parktown 'I hear they've increased funding for road repair and The Prime Minister has redirected part of Greenville's budget hospitals, but I can't see much work going on near me. I towards urgent needs such as healthcare, garbage collection guess they're concentrating on the centre of the city?' and road repair. While there is a general understanding among Greenville's population as to why these steps have been Fiona @ 786 taken, many are questioning the level of funding cuts to crucial 'I've just spoken to one of the families staying at the local services such as public housing, defence and schools. Others gym and they're getting pretty fed up with the whole argue that the funding increases don't go far enough, leaving situation. They had to wait over five hours at the hospital the hospitals short of staff, road repairs incomplete and garbage other night when their little boy became ill. It's not good.' still in the streets. Greg @ doonside 'The garbage on my street finally got cleaned up today, hooray! Too bad most of our friends are still waiting for the same service. I guess you've got to be patient in these situations.'

Budget 5 THE GREENVILLE GAZETTE: Social media response PM CUTS DEEP Social media response The Prime Minister's emergency response budget has made Joe @ parktown substantial cuts to a number of sectors, redirecting this 'Roads are back and the garbage in front of my house money to provide complete funding for healthcare, garbage was taken away this morning. Loving it. My aunt is still collection and road repair. With the hospitals and roads living in the local sports centre though …' back in working order and garbage off the streets, many Fiona @ 786 are applauding the Prime Minister's decision. Yet critics of 'Looks like we won't be going back to school anytime soon. the new budget argue that the huge cuts to public housing, Oh well, at least the hospitals are sorted. I just wish they'd do schools and defence were disproportionate. Some people something about the public housing situation.' are calling for a more reasonable distribution of funds for the citizens of Greenville. Greg @ doonside 'It's weird when you see your city's priorities reduced to garbage, roads and hospitals! I guess I can't complain too much. I feel sorry for those families without a home.'

Budget 6 THE GREENVILLE GAZETTE: Social media response PM TAKES CHARGE Social media response

The Prime Minister has taken charge of Greenville's disaster Joe @ parktown recovery taskforce, directing substantial funding towards 'I'm starting to see the roads cleared around our house vital services such as healthcare, sanitation and road repair. and they've taken the garbage away. There's still plenty Public housing and defence personnel will also receive to do but things seem to be moving along nicely.' emergency funds, although schools and other community Fiona @ 786 services will have to wait. While some are sure to be 'Our poor old school will have to wait, but the hospitals unhappy with these changes, many Greenville residents have and housing situation are really improving. They can now welcomed the move, designed to get the city up and running get the supply trucks through with fresh water and food.' as quickly as possible. Greg @ doonside 'Good to see the PM making the tough decisions. I'm off to volunteer with a local clean-up crew.'

Page 30 Tax in Your Community: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Interactive Tax in your community Years 7-10 TASK 1 INVESTGATING GOVERNMENTS AND SERVICES Worksheet YOU WILL: YOU WILL NEED:

„„ identify services funded by different levels of government „„ Fact Sheet: Interactive - Tax in your community „„ reflect on prior knowledge about government services and „„ Answer sheet: Investigating governments and services new understandings „„ Resource sheet: Investigating governments and services „„ reflect on personal attitudes about tax „„ 5 pieces of A3 paper per group „„ see how levels of government work together to deliver a „„ marker pens range of services „„ post-its

What is your attitude to paying taxes? What do you know about the services provided by government in your community?

COLLABORATIVELY INVESTIGATE, DRAW CONCLUSIONS AND REFLECT ON LEARNING

As a group, follow the structured process outlined in the flowchart below, ensuring everyone participates in a variety of roles: quiz master, quiz responder, scribe, talker, active listener and sensitive 'provocateur' (provoking thinking by asking questions that clarify and probe others’ statements). FOLLOW A REFLECTIVE INVESTIGATION

Set up your materials Head up five pieces of A3 paper with the following headings:

a. Attitude: What I feel about tax b. What we know about government services in our community Identify personal attitudes c. Evidence of government services in our „„ On post-its, write notes about your personal community attitude about tax, using a new note for each idea d. Conclusions about government services and tax (do not identify yourself). e. How my knowledge has changed. „„ Place these post-its on the first chart, “Attitude: What I feel about tax”.

Brainstorm knowledge „„ As a group, brainstorm a list of the services that government provides in your community. „„ Write the list on the second chart, “What we know about government services in our community”.

Page 31 Tax in Your Community: Task 1 Ta x , Super+You. Take Control.

Participate in a fieldtrip „„ Locate a site in your community to gather evidence of government services in your community, such as an out-of-school location or looking from a good viewing location in the school. „„ Identify and gather evidence of government services, using methods such as photos, sketches and notes. Evidence might include power lines which represent multiple services provided by government. „„ On return to the class, list these services on the third chart, “Evidence of government services in Record information about services by levels of government our community”. „„ Create a two-column table on the chart, “Evidence of government services in my community”. „„ Label the columns “Service” and “Level/s of government funding” „„ Referring to your gathered evidence, complete column one. „„ Compare and discuss the identified services with Participate in a quiz the original brainstorm list. „ Before the quiz, appoint a quiz master who is to: „ Decide which level or levels of government you think funds each service and record in column 2 „„ pose questions to the team (see Resource sheet: (you may adapt the format of the table). Investigating governments and services) „„ allow team discussion then to seek an agreed answer „„ record the answer „„ read the answers and explanation on the Answer sheet: Investigating governments and services. Reflect on learning „„ Refer back to the second chart, “What we know about government services in our community”. „„ Compare charts 3 and 4 with your original post-its on chart 1. „„ On post-its, write some observations about your changed learning and place on chart 5, “How my Reflect on attitudes knowledge has changed”. „„ Refer back to your post-its on the first chart, “Attitude: What I feel about tax”. „„ Annotate the original post-its, or stick new ones onto them, showing any change to your attitude about tax. Place back on the second chart. „„ Explain to a partner how your attitude has or has not changed and explain why.

Share „„ Glue or tape all five charts into one large chart. „„ Rotating in a clockwise direction, pass your chart on to the next group and take another group’s chart for study. „„ Note what refined understandings other groups reached.

Page 32 Tax in Your Community: Task 1 Ta x , Super+You. Take Control.

Tax 101 Interactive Tax in your community Years 7-10 TASK 1 INVESTIGATING GOVERNMENTS AND SERVICES Resource sheet

QUESTIONS FOR THE QUIZ MASTER

Questions require you to state which level of government:

„„ Australian „„ state/territory „„ local You may choose more than one answer.

A. All Australians are entitled to subsidised public hospital services. Which level of government pays for this?

B. Government-subsidised housing exists in all states and territories for disadvantaged Australians, particularly those who are homeless or at risk of becoming homeless. Which level of government pays for this?

C. Aside from those with tolls, all Australian public roads and freeways are free to use. Who pays for public roads and freeways?

D. The Australian court system is hierarchical, with each court using its powers to hear specific types of legal matters. Who funds our courts?

E. Local parks are a treasured feature of every community. Who pays for their establishment and maintenance?

F. The Australian Defence Force (ADF) consists of the Royal Australian Navy, the Australian Army and the Royal Australian Air Force. The ADF receives around $27 billion in funding each year. Which level of government funds the ADF?

G. All Australian school-aged children are entitled to free education. Schools operate at a local level but follow a state or territory and national curriculum. Who funds our free education?

H. All Australian households in metropolitan areas are entitled to garbage collection and recycling services. Who pays for these services?

Page 33 Tax in Your Community: Task 1 Ta x , Super+You. Take Control.

Tax 101 Interactive Tax in your community Years 7-10 TASK 2 GREENVILLE DISASTER Worksheet YOU WILL: YOU WILL NEED:

„„ analyse budgets for their strengths and weaknesses against „„ Fact Sheet: Interactive - Tax in your community criteria „„ use different ways of thinking to make informed decisions „„ consider how finite resources can be used to solve complex challenges „„ explore how levels of government work together to deliver a range of services

PROBLEM SOLVING USING DE BONO'S HAT THINKING

Your group’s task is to take on the role of the Prime Minister and his or her team with the challenging task of cleaning up Greenville after the flood disaster. To do this, you will need to use De Bono’s hat thinking (further explained on the next page) as you evaluate different budgets and their consequences. Follow the instructions to arrive at the best decisions for the Greenville community. Scenario The Greenville flood is so extensive that the state and local governments don't have enough funds to rebuild. They have asked you, the Prime Minister, to provide additional funds for the rebuilding work.

Your goal: Your goal is to move the city of Greenville's status from Crisis back to Stable in three key areas:

„„ community wellbeing „„ the economy „„ the environment.

To achieve this goal, you need to reallocate tax revenue to address the problems caused by the flood.

Your task „„ Talk to different community groups to understand the problems they now face and the funding required to address the problems. „„ Choose the budget that has the best chance of making the city stable.

Tips „„ You have two chances to choose the budget that will do the best job of making the city stable. „„ Try to prioritise the problems that have the greatest impact on the city's stability.

Page 34 Tax in Your Community: Task 2 Ta x , Super+You. Take Control. ANALYSE, EVALUATE AND MAKE DECISIONS

1. Study the De Bono hats below.

Discuss how thinking in different ways can change the outcome of a decision.

The Six Thinking Hats

White Hat Black Hat Red Hat The White Hat calls The Black Hat is The Red Hat signifies for information known judgment-the devil's feelings, hunches, or needed. advocate or why and intuition. something may not work.

Green Hat Yellow Hat Blue Hat The Green Hat The Yellow Hat The Blue Hat is focuses on creativity: symbolizes values used to manage the possibilities, and benefits and why thinking process. alternatives, and new something may work. ideas.

1. Read Fact sheet: Interactive - Tax in your community.

Take time to study Scenario: Devastation in Greenville in detail, including the proposed budgets.

2. Make an initial decision:

„„ As a group, decide which hat each person will wear. „„ The team must decide which crisis budget is the best fit for the community, taking into account: - the community wellbeing - the economy - the environment „„ When choosing a budget, each group member must comment on possible choices from their “hat” perspective. „„ The group may try a number of budgets before settling on one. „„ Decide on one budget (you can review your decision later).

3. Share and justify your initial budget choice with the class, ensuring you cover community wellbeing, the economy and the environment. Listen to others’ justifications.

4. Revise your decision-making:

„„ Read the media reactions to the six possible budgets. „„ Discuss how your chosen budget has been received by the community in relation to: - the community wellbeing - the economy - the environment „„ Decide if you wish to choose another budget. „„ Review it from all the “hat” perspectives. Go online. Try the „ interactive version of this „ Decide on a final budget. activity: https://www. 5. Share and justify your final budget choice with the class. Listen to others’ justifications. taxsuperandyou.gov.au/ „„ Decide which budget achieved the best outcome for – the community’s wellbeing, tax-in-your-community the economy and the environment.

6. As a class, discuss the complexities of decision making with finite resources and multiple needs:

„„ in the context of this activity „„ at the national or state level.

Page 35 Tax in Your Community: Task 2 Ta x , Super+You. Take Control.

Tax 101 Years 7-12 INTERACTIVE YOU Fact sheet MAKE THE DECISION

2. Dave Wilson – Cycling In2 the Future How does the government decide what to fund and for how Hi, I'm Dave Wilson and I'm from Cycling In2 much? And where does the government find funds to finance the budget? This interactive activity offers the experience of the Future. making budget and financing decisions. Adding additional cycle lanes, overpasses and underpasses to every major city will make it quicker and safer to cycle. This will encourage people to cycle DECIDING THE NATION'S BUDGET to work and will cut the number of cars on the roads. Dedicated bike lanes mean fewer accidents so it will reduce pressure on The Treasurer of Australia faces pressure about the best way to hospitals and doctors. Fewer cars on the road will mean buses allocate government spending. Six people representing various can run easier, so this becomes a win-win for everyone, not just organisations and government departments have made a special for cyclists. trip to Canberra to see the Treasurer. They want funding for We need to invest in bike lanes for every city – that's $610m for specific initiatives in the forthcoming Budget. the whole country to make this a reality.

Funding options

„„ don't fund „„ only fund in Sydney and Melbourne $160m „„ only fund larger cities $360m „„ fully funded in every city of 200,000 people or more $610m

1. Brett Martin – Commonwealth 3. Michael Cruz – State Government Weather Bureau I'm Michael Cruz and I work as a quantity surveyor for the State Hi, I'm Brett Martin. I'm an oceanographic scientist from the Government. Commonwealth Weather Bureau. This state urgently needs a major new high speed rail link that Oceanic buoys can be used to measure changes in sea can carry raw materials from inland regions to our recently levels and ocean currents. If we invest $720m in a program approved world-class Super Port. Far-sighted, long-term of automated deep sea buoys, sensors on the sea bed and investment is desperately needed to create our future as a global the surface will allow scientists to gather comprehensive and export, trading and manufacturing hub. We propose an ambitious up-to-the-minute information. They can use this detailed five-year investment plan that will create a world-class facility data to model the impacts of climate change for Australian which will not only benefit this state but also place Australia farmers. firmly on the international trading map.

The benefit will be more accurate predictions on sea level We need $3.6b to start constructing the high-speed rail link right changes that can lead to coastal erosion and inundation now and develop the required Super Port infrastructure. of low-lying coastal farming regions. It also helps with long-range weather forecasting, a service that is becoming Funding options increasingly important for Australian farmers. „„ don't fund „ Funding options „ only fund improving the current rail links $800m „ don't fund „ „„ fund only the rail link $1.7b „ only fund a trial program in local waters $240m „ „„ fully funded $3.6b „„ only fund buoys in the Pacific $480m „„ fully funded $720m

Page 36 You Make The Decision: Fact sheet Ta x , Super+You. Take Control.

4. Ling Chan – Future Forestry Associa- tion My name is Ling Chan and I represent the Future Forestry Association.

As a building material, timber takes much less energy to produce than bricks, steel or aluminium. Investment in plantation forests of genetically modified fast-growing trees will help Australia meet an ever increasing demand for housing materials.

Genetic modification technology, when used commercially in forestry, produces high timber yields. In addition to producing construction materials, we can also take advantage of the high global demand for timber fibre. And, of course, we shouldn't forget that each timber product from a plantation forest will ease the pressure on our native forests.

We need $1.2b to establish four major plantations to provide all of Australia's timber needs and provide a resource of export-grade timber.

Funding options 5. Rachael Morris – Aussie Home Support „„ don't fund My name is Rachael Morris. I am the treasurer for Aussie Home „„ only fund one major plantation $350m Support, which is a not-for-profit organisation. „„ funding two major plantations $650m Our not-for-profit organisation is usually funded by the „„ fully funded funding four major plantations $1.2b generous donations from the community but, as our population is ageing, there has been an increased demand for our services. We desperately need funding to maintain our in-home support services for the elderly and disabled in our community. 6. Lena Costa – Protect Our Wildlife Society We provide meals, domestic services, home maintenance and Hi, I'm Lena Costa and I'm a vet from Protect our Wildlife other support services to those who need just that little bit of Society. extra help. Most importantly we are a regular visitor, a friendly face at the door. Stray and feral animals pose a constant threat to our wildlife. Desexing our pets makes them less likely to wander from home We now want to expand our program right across Australia, and fight and, more importantly, will reduce the numbers of particularly to reach those more isolated people in rural unwanted pets that become the stray feral dogs and cats that locations. We need an additional $1.3b to help us extend our currently prey on our native animals. services and help the more than 2 million carers out there.

The problem is that many people can't afford to get their pets Funding options desexed and microchipped. To address this problem, we want to „„ don't fund set up a free mobile service nationally. To do this, we will need to „„ only fund a limited expansion of the current program purchase and modify 600 locally built panel vans. We estimate $300m that the staff training, salaries, equipment and support services „„ only fund major rural centres $600m for this much needed scheme will cost $111m in total. „„ fully fund coverage right across Australia $1.3b Reducing unwanted strays through desexing is necessary if we want to look after our wildlife as well as our pets.

Funding options

„„ don't fund „„ only fund a trial scheme $10m „„ fund a reduced scope $50m „„ fully funded $111m

Page 37 You Make The Decision: Fact sheet Ta x , Super+You. Take Control. FUNDING OPTIONS AND RESPONSES

1. Brett Martin – Commonwealth Weather Bureau Funding options Representative's response

Don't fund That's really disappointing. Without accurate climate data, our Australian farmers won't be able to plan to meet this global challenge.

Only fund a trial program in A trial program is always beneficial to any project, but we really had hoped to see a more long- local waters $240m term commitment.

Only fund buoys in the Pacific Thank you. Funding buoys in the Pacific will help us gather important localised data to improve $480m our understanding of climate change.

Fully funded $720m That's such great news! Gathering a comprehensive range of data will help Australian farmers to manage the challenge of climate change.

2. Dave Wilson – Cycling In2 the Future Funding options Representative's response

Don't fund Without any funding, lives will continue to be lost on our roads. The need to provide safe paths for cyclists and care for the environment are issues that won't go away.

Only fund in Sydney and Limiting funding to just two major cities to manage a country-wide problem is less than ideal, but Melbourne $160m at least it's a start. It's better than where we are now and will begin to save some lives.

Only fund larger cities $360m Thank you. Your decision will provide cycle lanes to the majority of Australians, but I urge you to not forget our smaller communities.

Fully funded in every city What an excellent outcome! The benefits of this program will make a huge impact right across of 200,000 people or more Australia. $610m

3. Michael Cruz – State Government for high speed rail link Funding options Representative's response

Don't fund We urge you to reconsider this decision. The long-term benefits to our state and the nation will outweigh the investment for years to come.

Only fund improving the Our current railway lines do need improving, but this level of funding won't help us to develop the current rail links $800m Super Port we need.

Fund only the rail link $1.7b The high speed rail link is a good outcome and there will be notable benefits. We still believe, however, that investment in the Super Port is needed.

Fully funded $3.6b This is the best possible result; Australia's place as a world-class exporter, manufacturer and trading hub is now assured.

4. Ling Chan – Future Forestry Association Funding options Representative's response

Don't fund Your decision doesn't support the need in Australia for a viable forest industry able to meet local and global demands for timber. The rural communities will be hardest hit by not funding these plantations.

Only fund one major plantation Funding for only one plantation will really diminish the scientific and commercial outcomes of the $350m project.

Funding two major plantations Thank you; two plantations will get this project off to a good start. $650m

Fully funded $1.2b We are extremely pleased with this vote of confidence in our work.

Page 38 You Make The Decision: Fact sheet Ta x , Super+You. Take Control.

5. Rachael Morris – Aussie Home Support Funding options Representative's response

Don't fund Our ageing and disabled populations need our support and we need funding to continue our work. Please reconsider your decision.

Only fund a limited expansion Whilst any funding in this sector is welcome, $300m just isn't enough to cover our growing of the current program $300m needs.

Only fund major rural centres Reaching those isolated in rural locations will be a great achievement. $600m

Fully fund coverage right What a wonderful result! This funding will give immediate help to the elderly and disabled right across Australia $1.3b across our community.

6. Lena Costa – Protect Our Wildlife Society Funding options Representative's response

Don't fund The impact of this decision will soon be apparent in our dwindling wildlife numbers as the feral population grows uncontrollably. We need something done before it's too late to save our wildlife and pets.

Only fund a trial scheme $10m A trial scheme will only scratch the surface of this problem.

Fund a reduced scope $50m Thank you, we will be able to make a real difference with this level of funding, but would of course prefer more!

Fully funded $111m Fantastic! This scheme will make immediate and dramatic improvements to our native wildlife and the safety and security of our pets.

Financing options Compensating actions will be required to raise finance to pay for the initiatives.

Compensating action Revenue

Increase GST on goods and services to 10.5%. $2.5b

Reduce eligibility for youth allowance. $500m

Reduce tax-free threshold by $1,000. $1.5b

Increase company tax by 1%. $1b

Increase income tax rates for incomes over $100,000. $500m

Reduce overseas aid spending by $500m. $500m Deciding on what to fund, how much to spend and how to finance the budget are decisions governments have to make.

Page 39 You Make The Decision: Fact sheet Ta x , Super+You. Take Control.

Implications of financing options A. No financing option:

Your choices are important. Think about what you are being asked to fund, how important it may be now and in the future, and the benefits to the community.

B. Only one financing option Compensating action Revenue

Increase GST on goods and services to 10.5%. Choosing only one way to fund these projects might seem easy but is this the best way? What other options might you consider?

Reduce eligibility for youth allowance. If you make this your only choice, think what might happen to those who need the Youth Allowance. Should you re-examine your decision?

Reduce tax-free threshold by $1,000. How might this decision affect your community? Is there a better way? What could you do differently?

Increase company tax by 1%. Taking this as the only option might create other problems. Could this be true? What might happen? Is there another way to fund these projects?

Increase income tax rates for incomes over How might this decision affect your community? Is there a better way? $100,000. What could you do differently?

Reduce overseas aid spending by $500m. Some countries are in desperate need of assistance; this option will not help them. Would this choice be better than other options you have?

C. Two or three financing options Minimum Maximum

Major overspend -$601m By spending more than you have, this may complicate your future budget position and the services you can afford to fund in the future. Go back and re-examine your choices what can you change to produce a better result?

Minor overspend -$600m -$201m How close can you get to balance your budget? Can you do something differently?

Balanced -$200m +$200m Well done. Balancing the budget is about making choices and decisions to fund services for the community. It's not always easy, but you've done a pretty good job!

Minor underspend +$201m +$600m How close can you get to balance your budget? Can you do something differently?

Major underspend +$601m You have more money available to fund more community services. Is there anything else you would like to fund?

D. Four financing options Think for a moment about what your decisions may mean for the community. Are there other ways to balance your Budget?

E. Five financing options Your decision means there are lots of changes. Ask yourself who is affected, what does it mean to them and how will you explain it to your community? Is there a better way?

F. Six financing options You've managed to fund your choices by changing everything. Is this the best way?

Page 40 You Make The Decision: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Interactive You make the decision Years 7-12 TASK 1 MAKE THE DECISION Worksheet YOU WILL: YOU WILL NEED:

„„ explore the process of funding and financing of government „„ Fact Sheet: Interactive - You make the decision budgets for community services „„ create criteria to make and evaluate decisions about funding and financing community initiatives „„ review financial decisions in light of calculations and new information „„ participate in discussion and critique of others’ budget decision-making DECIDING THE NATION'S BUDGET

Setting the scene As Treasurer of Australia, you and your team face pressure about the best way to allocate government spending. Many people have strong views about where and how much of taxpayers' money the government should spend.

You have worked extensively with Treasury advisers and at this point the Budget for the coming year is close to completion. Your advisers have recommended that the current state of the economy requires your Budget to be as close as possible to 'balanced', that is, revenue should equal spending.

Six people representing various organisations and government departments have made a special trip to Canberra to see you. They want you to fund a specific initiative in the forthcoming Budget.

Each project has a large number of supporters who are very keen for your government to accept their request. Most of the initiatives have been well publicised on TV and in newspapers and other media, so your decision will be widely discussed.

Your group’s task In this task, you will consider six proposals for public spending and decide what level of funding you will give. Your funding decisions will form a draft budget, which will need to be financed. You will next evaluate financing options and decide which option/s will fund the proposals. You will then need to review your funding for the proposals and funding options so that you arrive at a balanced budget.

Take notes: be prepared to share your thinking at the end of the task.

Evaluate information Follow the instructions to complete the task.

Consider proposals

1. Read Fact Sheet: You make the decision. 2. Consider each proposal and the four funding options for each. 3. Create criteria that will help you decide on funding options. Write them below:

Funding criteria

Page 41 You Make The Decision: Task 1 Ta x , Super+You. Take Control. MAKE FINANCIAL DECISIONS

4. Decide a funding option for each proposal and record these in the table below. Representative and Enter your chosen funding Representative and Enter your chosen funding funding options value $ funding options value $

Brett Martin Ling Chan

1. $0 1. $0 2. $240m 2. $350m 3. $480m 3. $650m 4. $720m 4. $1.2b

Dave Wilson Rachael Morris

1. $0 1. $0 2. $160m 2. $300m 3. $360m 3. $600m 4. $610m 4. $1.3b

Michael Cruz Lena Costa

1. $0 1. $0 2. $800m 2. $10m 3. $1.7b 3. $50m 4. $3.6b 4. $111

You now have a draft budget. But will it be easily funded? Are you minimising opportunities to improve the community? Or have you been too ambitious? Do the funding tasks arrive at a balanced budget that delivers community services?

5. Study the financing options onFact sheet – You make the decision.

6. Analyse one or more compensating actions.

7. Discuss considerations that need to be made when choosing these actions and record below

8. Decide which compensation action/s you will use to fund your budget and record in the table.

Compensating action Revenue raised Enter your chosen financing value Increase GST on goods and services to 10.5%. $2.5b Reduce eligibility for youth allowance. $500m Reduce tax-free threshold by $1,000. $1.5b Increase company tax by 1%. $1b Increase income tax rates for incomes over $100,000. $500m Reduce overseas aid spending by $500m. $500m Total $

Page 42 You Make The Decision: Task 1 Ta x , Super+You. Take Control.

9. Calculate your budget using the table below.

Subtract your funding total from Enter your compensating actions total Enter your funding total your compensating actions total to determine your Budget

$ $ $ EVALUATE DECISIONS

Review budgets

Now that you can see the effects of your decisions, you may need to review your funding and financing decisions to ensure a balanced budget. To balance the budget, you need to cut another form of spending, or raise more tax to gain the revenue required to fund the proposed initiatives.

10. Review your budget and make changes where necessary.

11. Evaluate your budget, by asking questions such as:

„„ Is this the best way? „„ What does this mean for the community? „„ Who is affected? What does it mean to them? „„ How will we justify our decisions to the community? „„ Is there a better way?

12. Test your final budget by considering the information in the section “Implications of financing options” in Fact sheet: You make the decision.

Share and evaluate budgets How good is your budget?

13. Participate in a class evaluation of all group budgets using the following steps:

„„ Present your budget and your decision- making criteria and considerations. „„ Justify your final budget. „ „ Listen as class members, ask questions and critique your decisions. Go online. Try the „ interactive version of this „ Be prepared to use your criteria and activity: https://www. considerations to critique other groups’ taxsuperandyou.gov.au/ budgets. you-make-the-decision 14. Vote on the best budget. 15. Participate in a general discussion about the complexity of government budgeting.

Page 43 You Make The Decision: Task 1 Ta x , Super+You. Take Control.

Tax 101 Activity 5 Years 7-10 HISTORY OF TAX AND Fact sheet WELFARE IN AUSTRALIA

Taxes have changed and evolved over time. Many significant tax changes have occurred since Federation. Changing needs, technology and world events have all had an impact on the Australian tax system. Discover the changes made in the Australian tax system and explore the reasons taxes change.

A BRIEF TAX AND WELFARE HISTORY

Prior to 1901, taxes and welfare services varied between the colonies and even today some taxes and welfare benefits (such as Worker's Compensation) still differ according to the state and territory in which you live. After Federation in 1901, the Commonwealth Government gained control over some of the taxes, introduced others and increasingly took responsibility for the provision of welfare. Changing needs, technology and world events have all had an impact on the Australian tax and welfare systems.

Table 1: Timeline: Tax history Date Tax event Background information customs Prior to Taxes imposed by Each colony (later state or territory) had its own tax system. Most of their revenue was gained from There was no free trade between the colonies. Income tax in various forms was introduced 1901 each colony and excise duty. to Tasmania in 1880, South Australia 1884, New South Wales and Victoria in 1895 and Queensland in 1902. 1901 Formation of Under the Commonwealth of Australia Constitution Act 1900 (UK) the states and territories gave up the right to This meant a removal of all duties on goods traded between the states and Commonwealth levy customs and excise duties. territories. The states and territories gave up a number of other powers to the Commonwealth Government. personal income tax and a tax on retained company profits 1915 Introduction of The Commonwealth Government introduced a personal income tax to help pay for war expenses. The states were also still collecting income taxes. By 1918 income tax revenue by Commonwealth provided one-third of Commonwealth tax revenue and half of state tax revenue. The name of the Land Tax Office, established in 1910, was changed to the Taxation Office to reflect its wider tax administration and collection roles. Government 1942 Income tax The Committee on Uniform Taxation recommended that the Commonwealth Government become the single paid solely to income taxing body for the period of World War II. Much of the tax collected was then distributed to the states Commonwealth for their use. Government 1942 PAYE tax The pay as you earn (PAYE) tax system where employees had their tax deducted periodically by their employer was introduced for wage and salary earners. A provisional tax system was introduced for non-wages and salary income. was introduced to cover taxpayers paid by contract in certain industries 1983 Contractor payments The Prescribed Payments System such as building and construction. 1984 Medicare levy The Medicare levy was introduced. 1985 Capital gains tax The capital gains tax (CGT) is a tax on the profits made on the sale of certain assets. 1986 Fringe benefits tax The fringe benefits tax (FBT) taxes businesses that pay employees in fringe benefits such as cars and shares. The CGT and FBT were introduced to widen the tax base and are designed to stop tax avoidance. Income Tax Assessment Act 1936 by introducing a new 1997 Simplifying the The Commonwealth Government tried to simplify the Income Tax Act act and rewriting the provisions. 2000 GST A New Tax System (ANTS) introduced major changes to the Australian taxation system. The changes included a 10% goods and services tax (GST) on the sale of most goods and services, changes in tax rates for individuals, and introduction of the business activity statement (BAS). Project Wickenby, a multi-agency taskforce, was established with the aim of protecting the integrity of Australian 2006 Closing of tax havens secret tax havens. financial and regulatory systems. It aimed to prevent taxpayers from participating in the use of 2008 Proposed reform of The Review Panel on Australia's Future Tax System, known as the 'Henry Review', looked into a comprehensive tax system reform of the tax system. Source: Reinhardt, S and Steel, L 2006, 'A brief history of Australia's tax system', 22nd APEC Finance Ministers' Technical Working Group Meeting in Vietnam

Page 44 Activity 5: Fact sheet Ta x , Super+You. Take Control.

1 Table 2: Timeline: Welfare history Welfare event Background information Date (Commonwealth)

1908 Age and invalid pension Replaced state schemes, were funded from general revenue, unrelated to a person’s past earnings and were means tested. 1912 Maternity allowance Fixed amount payable to the mother on the birth of each child, funded from general revenue, not means tested. 1932 Financial assistance to The Commonwealth Government introduced legislation authorising it to give financial assistance to the states Loan (Unemployment Relief states and territories the and territories to provide the unemployed with relief work (work for the dole). unemployed Works) Act 1932 (Cth) 1939 Department of Social Created in 1939 and became fully operative in 1941. Pensions had previously been administered within the Security Department of the Treasury. 1941 Child endowment A family allowance paid at a fixed rate with no means test, funded from general revenue. The first child was initially excluded from the scheme, but brought into it in 1950. 1942 Widow’s pension Funded from general revenue and means-tested. The definition of a “widow” included several categories of women who, through no “fault” of their own, had lost the support of their partner. 1943 Pension allowances Funeral benefit: Lump sum grants payable for the funeral costs of a pensioner, funded by general revenue and means tested.

Wife's allowance: for an incapacitated male pensioner with a dependent spouse, funded by general revenue and means tested. 1943 Commonwealth Financial Eligible students received payment of all university fees and assistance with living costs; subject to a means Assistance Scheme test on student and parental income. Financial assistance was mainly provided to students in those faculties considered most important for the war effort: 1945 Unemployment and Fixed rate, funded from general revenue and means tested. Tight conditions applied with regard to sickness benefits availability and willingness to work. 1945 Commonwealth and State Financial assistance agreements between the Commonwealth and the States to provide housing assistance Housing Scheme to people in need. 1946 Commonwealth Established to assist job seekers. Formed part of the strategy to restore and maintain full employment. Employment service 1946 Referendum The referendum sought an extension of Commonwealth powers in the areas of social security and health. The referendum was carried.

1947 Social Services Act The Act gave the Commonwealth power to make laws with respect to the provision of a range of welfare benefits and services. 1951 Commonwealth Selection for a Commonwealth Scholarship Scheme was based on academic merit. Scholarships were Scholarship Scheme available for students enrolled in approved courses. 1956 Supplementary Assistance Additional support for pensioners paying rent. Later became a program for a much larger group of people on low incomes. Current Family Tax Benefit Paid to families to help with the cost of raising children. Income tested. Includes a payment for the birth of each child. This was formally Child Endowment which was means tested from 1988. Current Age pension Paid to people who meet age requirements, subject to a means and asset test. Current Newstart Allowance Paid to unemployed people over 22 years and under pension age. Must be looking for paid work and income and asset tested. Current Youth Allowance/Austudy/ Paid to full-time students/apprentices, income and asset tested. Abstudy Current Disability Support Pension. Paid to people who have a permanent medical condition that stops them from working. Income and assets tested. Current Parenting Payment Paid to parents who meet principal carer rules and care for a child under 8 if single or under 6 if partnered. Income tested. Current Sickness Allowance An income support payment for people who can’t work or study for a while because of illness, injury or disability. Income and assets tested.

1Note this timeline shows significant welfare events between Federation and the late 1950s and current social security benefits.

Page 45 Activity 5: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Activity 5: History of tax and welfare in Australia Years 9 -12 TASK 1 TAX CHANGES Worksheet YOU WILL: YOU WILL NEED:

„„ investigate tax change/s in the period you are studying and „„ Fact Sheet: History of tax and welfare in Australia analyse why the change happened, its intended impact and its legacy „„ make conclusions about the role of tax in response to changing times

Since nationhood, Australian governments have implemented different types of taxes and levies to generate funds for particular purposes and to respond to changing times and needs. Discover the changes made in the Australian tax system and explore the reasons taxes change. REFLECT ON KNOWLEDGE

Tax changes over time 1. Read Fact Sheet: History of tax and welfare in Australia.

2. Reflect on your learning from the fact sheet by completing the chart.

Something I would like to Something I already know more about is... know is...

Something everyone should know is... Something I did not know is... Something that surprised me is... Something I don’t understand is...

Page 46 Activity 5: Task 1 Ta x , Super+You. Take Control. INVESTIGATE The case for change Your task is to investigate tax change/s in ONE of the following periods of Australia’s history: „„ 1788 - 1918 „„ 1918 - present Your brief report will explain the reasons behind the change/s and its intended impact on the Australian economy and society. Investigate one tax reform that relates to the periods you are studying, to arrive at some conclusions about the role that tax plays in society as times change.

Follow the guided investigation process below:

Independently: 1. Choose a tax change or changes in the period you are investigating. Examples include:

„„ 1788-1918: Changes to taxes levied by the Commonwealth government during World War I „„ 1918-present: Changes to responsibility for personal income tax collection during World War II

Independently:

2. Locate sources for your inquiry, such as history texts, credible internet sources, ATO website, and Hansard. You may also like to refer to the book, Working for all Australians: A brief history of the Australian Tax Office 1910–2010 by Leigh Edmonds. You can download relevant chapters from the ATO website, see 'Working for all Australians 1910–2010'.

3. Research details about the tax change/s. Your research should focus on the following questions:

„„ What was the tax change? „„ When was it introduced? „„ What was happening at that time in the economy and society that provides the background or context to this change? „„ What were the reasons for change? „„ What was the planned impact that the tax change was intended to achieve? „„ Has the change continued? Why?

With others: 4. Collate your findings „„ Meet with others who have researched the same tax change. „„ Compare then collate your notes onto a large piece of paper.

Independently: 5. Make conclusions Using the evidence presented, write a clear concise conclusion about how governments respond to changing times through the tax system. Your conclusion will address these ideas:

„„ how society’s needs and wants change over time „„ the role of the government in identifying change, and changing tax laws and procedures to meet changes „„ the difficulties involved in achieving desired change „„ why it is important that the government should monitor and adapt to change. 6. Submit your group’s collated work to your teacher for a later activity.

Page 47 Activity 5: Task 1 Ta x , Super+You. Take Control.

Tax 101 Interactive - Shaping the system Years 7-10 DEVELOPMENT OF AUSTRALIA'S TAXATION SYSTEM Fact sheet

What is Australia's history in terms of tax events? What were the issues around these eventsthe time? and what was the context of

Australia's tax landscape has been shaped by a myriad of historical developments and government decisions. The following timeline has five stages in the development of Australia's tax system. During each period, key government decisions and social factors led to the introduction of new taxation policies and approaches.

Convicts, colonials and customs | 1788-1850 From early colonisation through to the mid-19th century, Australia was a heady mix of cultures and convictions.

1. The First Fleet arrives in New South Wales to set up a penal colony, bringing with it a Royal Instruction to impose taxes as necessary. Soon after, wharfage fees and importation duties (excise duties) on wine, spirits and beer are imposed.

2. The Rum Rebellion (the only armed takeover of an Australian government) sees the overthrow and arrest of Governor William Bligh, who was limiting the use of spirits as payment for commodities.

3. Customs duties are introduced on the export of timber, wool, seal and whale oil, and seal skins.

4. Taxation revenue is used to fund hospital equipment and building works, as well as the construction of a gaol and an orphanage in Sydney.

Riches, rules and rebellion | 1851–1900 Gold is discovered, and Australia's colonies begin to expand.

1. Death duties are levied in the colony of New South Wales.

2. The Eureka Stockade rebellion sees armed conflict on the Victorian goldfields against a gold licensing fee, which is seen as 'taxation without representation'. The licences were replaced by a Miner's Right.

3. New South Wales introduces the first land tax, with the other colonies soon following.

4. Tasmania establishes an income tax on its citizens, and all the other colonies progressively follow.

Page 48 Development of Australia's Taxation System: Fact sheet Ta x , Super+You. Take Control.

Constitution, currencies and conflict | 1901–1940 Australia becomes a unified nation, with a baptism of fire.

1. The Federation of Australia brings in the Australian Government customs and excise system (the right of states and territories to levy these taxes is removed) and provides the constitutional authority for an Australian Government income tax (although the latter is not enacted until 1915).

2. The Australian Government land tax system is introduced to fund age pensions, break up large landholdings and tax pastoral leases.

3. A new bank note tax means private currencies (issued by banks) are replaced by federally-issued notes in denominations of 10 shillings, £1, £5, £10, and any multiple of £10.

4. The Australian Government introduces income and estate taxes to help fund Australia's involvement in World War I.

Toil, trade and tariffs | 1941–1960 War makes way for manufacturing and significant cultural events.

1. To help pay for the war effort, uniform tax laws are introduced in Australia, adding extensive powers to the Australian Government and greatly reducing the autonomy of the states. The law meant that the Australian Government became the single income taxing body.

2. Holden produces its first Australian-designed motor car, supported by Australian Government tariffs on imported motor vehicles and parts.

3. The Australian Government scraps its land tax, which provided significant revenue for over 40 years.

4. The Australian Government charges payroll tax to fund a national child endowment scheme, which lasted for 30 years before this became a state and territory tax.

Health, holiday homes and hamburgers 1961–2000 Modern Australia thrives as the population pushes out to 20 million.

1. Medibank is replaced by Medicare as Australia's healthcare system, supported by Medicare levy funding.

2. A national goods and services tax (GST) of 10% is introduced to Australia.

3. The Australian Government brings in a capital gains tax and a fringe benefits tax commences the following year.

4. Business activity statements become part of the collection system behind Australia's new goods and services tax (GST).

Page 49 Development of Australia's Taxation System: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Interactive - Shaping the system Years 7-10 TASK 1 DEVELOPMENT OF AUSTRALIA’S TAXATION SYSTEM Worksheet YOU WILL: YOU WILL NEED:

„„ construct an annotated timeline showing significant tax „„ Fact Sheet: Shaping the system - Development of Australia’s events in Australia’s history taxation system „„ identify continuities and changes in Australia’s taxation „„ Fact Sheet: History of tax and welfare in Australia system over time and explain factors that led to change

BUILD YOUR KNOWLEDGE

Review the information you have studied to deepen your knowledge of events in Australia’s taxation history:

„„ Read Fact sheet: Interactive - Shaping the system - Development of Australia’s taxation system „„ Review Table 1 in the Fact Sheet: History of tax and welfare in Australia. CONSTRUCT A TIMELINE

1. Construct a timeline showing the five significant stages in the development of Australia’s taxation system since 1788.

2. Add the following to the timeline in the correct period and in chronological order: „„ Taxes „„ Tax revolts 3. Annotate your timeline to show if a tax was levied by the states, the Australian Government or both. Highlight changes to the taxing powers of states and the Australian Government, such as when the Australian Government became the single income taxing body in 1942.

Use the following events to construct your timeline: „„ Customs duties „„ Fringe Benefits Tax

„„ Import (excise) duties „„ Rum rebellion

„ „ „ Wharfage fees „ Health care „„ Death duties „„ Medicare levy „„ Land tax „„ Eureka stockade „„ Income tax „„ Goods and Services Tax

„„ Payroll tax „„ Capital Gains Tax

„„ Gold licensing fee

4. Add to the timeline goods, services and benefits that are listed in the Fact sheet as being funded by taxation (note not all goods and services funded by taxation are included in the Fact sheet).

Try playing the IDENTIFY CONTINUITY AND EXPLAIN CHANGE online interactive game: https://www. 5. Now that you have created the pattern of taxation changes over time, identify: taxsuperandyou.gov.au/ „„ the main continuities shaping-the-system

„„ the changes

6. Identify and explain the factors that influenced changes to Australia’s taxation system over time.

Page 50 Development of Australia's Taxation System: Task 1 Ta x , Super+You. Take Control.

Tax 101 Activity 6 Years 7-12 ROLE OF THE

ATO IN AUSTRALIA Fact sheet

The main interactions most Australians have with the Australian Taxation Office (ATO) are lodging an income tax return each year and having tax taken from their pay. The ATO interacts with almost every sector of the community. Each year, the ATO processes tax returns for around 13 million personal taxpayers and 2 million businesses and not-for-profit organisations.

The aim of the ATO lodgment system is for everyone to pay the correct amount of tax. The ATO aims to make people who hide income and evade their tax obligations pay the correct amount.

The Australian taxation system works on the principle of self-assessment. This means that the information supplied by the taxpayer is usually accepted as being correct when the return is lodged. The ATO may later check the details with the taxpayer and against other sources of information. If someone has not declared all their income, or has made a claim for something which they are not entitled to, they must pay the tax they owe and may have to pay a penalty.

The main responsibility of the ATO is to administer the Australian Government’s tax and super legislation. The ATO is the main revenue collection agency for the Australian Government. Taxation revenue provides over 80% of Australian Government revenue, which funds the implementation of social and economic policies.

Some of the responsibilities of the ATO in administering legislation are:

„„ collection of revenue, including GST „„ aspects of the superannuation system „„ excise „„ income tax, including PAYG withholding and instalments „„ fringe benefits tax „„ grants and schemes relating to fuel „„ sharing information with Centrelink, the Department of Human Services, the Australian Bureau of Statistics and the Department of Home Affairs „„ collection of the Higher Education Loan program (HELP) debt through the taxation system „„ the Australian Business Register (ABR) and the Australian Business Number (ABN) system.

Page 51 Activity 6: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Activity 6: Role of the ATO in Australia Years 7-10 TASK 1 AUSTRALIAN TAXATION OFFICE FACTS Worksheet YOU WILL: YOU WILL NEED:

„„ become aware of the wide range of work undertaken by the „„ Fact Sheet: Role of the ATO in Australia Australian Taxation Office Learn about the purpose and operations of the Australian Taxation Office (ATO).

RESEARCH

1. Locate an information source that details the range of work for which the Australian Taxation Office (ATO) is responsible, such as the homepage of the ATO website.

2. Using the categories below, identify a number of facts that explain the role of the ATO. One example is provided. Be comprehensive, for example, include tax, super and community support.

Some main responsibilities of the Australian Taxation Office Individuals Business Not-for-profit

Example: Processes individuals’ tax returns

Make conclusions

3. Reflect: Following my research, what surprised me was….

4. Using the sourced information, write a conclusion about the role of the Australian Taxation Office and its responsibilities.

Page 52 Activity 6: Task 1 Ta x , Super+You. Take Control.

Tax 101 Interactive - Shaping the system Years 7-10 THE AUSTRALIAN TAXATION SYSTEM Fact sheet Explore Australia’s three levels of government, how they source their income and their major items of expenditure.

Australia's taxation system consists of three levels: Australian, state and territory, and local.

Although there are as many as 125 different taxes, they boil down to about 10 common taxes and most people will only have to pay a few of those.

TAX COLLECTION SPENDING Tax collection – Australian Government So how is revenue collected? Spending – Australian Government So, what happens to all this money? The Australian Government collects over 80% of all tax revenue. This comes from nearly 100 different taxes. But only three of these The Australian Government distributes around one-third of all account for about two-thirds of all the tax collected in Australia: the tax it collects directly to the state and territory governments in grants and subsidies. Another third of Australian Government „„ income tax for individuals taxes is spent each year on social security and welfare „„ the goods and services tax payments, giving a direct personal benefit to households. The „„ company tax. remainder is used by the Australian Government to directly fund services such as health, education and our defence forces. Tax collection – state and territory governments Let's examine how some of this revenue is put to use: At the state and territory level, around 50% of their revenue comes Federal funding flies high:If you drive across the Nullarbor, as grants from the Australian Government. Some of these grants you'll be reminded repeatedly of Australia's health system – the are for specific purposes, like shared funding to build a new Royal Flying Doctor Service (RFDS) has landing strips built highway or a hospital, while the rest is added to general revenue. on the Eyre Highway for its emergency use. The Australian State and territory governments top up their reserves with around Government funds the RFDS, which conducts over 16,000 25 different taxes, including charges on property, payroll taxes remote clinics and cares for over 200,000 patients annually. On and fees for the provision of services. average around 38,000 people require the RFDS emergency medical evacuation services each year. The RFDS could Tax collection – local governments not carry out this critically important work each year without At the local level, 80% of local government tax revenue comes funding from the Australian Government. from rates paid by property owners. This is the only local government tax. It creates 4% of the total tax collected in Australia. Local governments are also dependent on grants, receiving almost 20% of their tax revenue in grants from the Australian and state and territory governments.

Page 53 The Australian Taxation System: Fact sheet Ta x , Super+You. Take Control.

Spending – state and territory governments The state and territory governments also put their money to good use. They provide grants and subsidies to local governments, provide services such as building and maintaining social housing projects, looking after our roads, and helping to fund our public health system. Let's examine how some of this revenue is put to use:

Buying bricks and mortar: Of the seven million dwellings in Australia, around 400,000 of them are social housing. That's almost 6% of all of Australia's dwellings – so you probably know someone benefiting from a state or territory government's funding of social housing. This funding enables housing support for many Australians, helping to provide them with affordable accommodation that is matched to their household needs. Almost 60% of the people assisted by social housing are receiving either a government age pension or a disability support pension.

State and territory governments also fund around half of the cost of the Australian education system. About $41 billion every year. That's a lot of investment!

Spending – local governments Roads through revenue: Australians have been building, Closer to home, local governments use the rates paid by improving and repairing roads since our very first road property owners, combined with the grants and subsidies construction began in Sydney in May 1788. However, it might they receive from the Australian and state and territory surprise you to discover that the first road between Western governments, to fund a range of services throughout your Australia and South Australia wasn't built until 1941, or that neighbourhood. Local councils also help to fund transportation Perth didn't have a set of traffic signals until 1953. Local roads and infrastructure. This includes around $4 billion each year make up 85% of Australia's vast 800,000-kilometre road to build and maintain roads. Let's examine how some of this network. Maintaining this infrastructure is a huge undertaking revenue is put to use: that costs local governments around $4 billion each year.

Tax working for you and your community Australians can have a say in how taxation revenue is spent. In Australia we elect Australian Governments every three years, our state and So why not take a look territory governments at least every four years around the neighbour- and our local governments every four years. hood and see how your Issues such as taxation policies, government taxes are working for revenue and budgets are among the wide range of you.. issues we consider when we vote. Your vote shows who you believe will best serve your community.

Page 54 The Australian Taxation System: Fact sheet Ta x , Super+You. Take Control.

Tax 101 Interactive Shaping the system Years 7-10 THE AUSTRALIAN TAXATION SYSTEM Worksheet YOU WILL: YOU WILL NEED:

„„ analyse the purpose and design features of infographics „„ Fact Sheet: Interactive - Shaping the system - The Australian „„ design and create an infographic that shows how taxation system governments source and spend funds in the community „„ research and reference sources of information and data TAP INTO PRIOR KNOWLEDGE

Explore infographics Where have you come upon 1. Think, pair, share: What is an infographic? infographics? What is the purpose of an infographic? What are the text features of an infographic? Analyse 2. Compare your answer to this definition:

An infographic makes complex information easily understood through a visual representation of data and images that is

concise, eye-catching and easily shared. Infographics use images, brief text and often statistics.

3. Locate and compare an infographic with some found by your peers. Discuss: „ „ Through what media is the infographic communicated? Display your sample „„ Who is the intended audience? infographics around the „„ What are the key messages? room for future inspiration. „„ What features promote the key messages? „„ Does the infographic share complex information in a concise, easily understood, eye-catching way? „„ How effective is the infographic in your opinion? CREATE AN INFOGRAPHIC

4. Understand your task. Use a design process to create an infographic:

„„ Your purpose is show (a) how the three levels of government are funded in Australia and (b) how they spend their funds. „„ Your audience is the Australian public.

5. To do this, you will research:

„„ facts and statistics „„ use Fact Sheet: Interactive - Shaping the system - The Australian taxation system „„ research other sources, for example, the Australian Bureau of Statistics. „„

Page 55 The Australian Taxation System: Worksheet Ta x , Super+You. Take Control.

6. Follow the design process below to create your infographic, ideally using digital resources. Evaluate

What ideas do I have? What does the research What is my challenge? show? Which ideas are an How do I research it? opportunity to help my task? What am I thinking? What are my initial What will I create? What are others ideas? thinking? What problems will I have to resolve?

How do I make my infographic? What will my mock-up or prototype be like? How will I share my How effective was my infographic? What feedback of my infographic? mock-up or prototype How will I explain can I use to refine my and justify my design ideas? choices?

EVALUATE

7. Present and share designs. Justify your design choices. Seek and offer feedback using the criteria list.

Criteria: Your infographic: ™™ clearly shows how the three levels of government ™™ uses a social medium that suits the intended audience spend their funds and purpose ™™ has references that show sources of factual ™™ communicates complex messages in a concise, eye- information. grabbing, easy to understand way ™ ™ clearly shows from where three levels of government source their funds

REFLECT

8. Refer back to your notes at the start of the module about what you know about tax and your value for knowing about it.

Write some reflections about the change in your knowledge and attitude about the role of tax.

With a partner, discuss what you conclude about your learning in this module.

Page 56 The Australian Taxation System: Worksheet Ta x , Super+You. Take Control.

Tax 101 Years 7-10 CHALLENGE QUIZ TAX 101 Worksheet YOU WILL: YOU WILL NEED:

„„ test your new knowledge about the who, what, how and „„ Answer sheet: Tax 101 – Challenge quiz why of tax Test your knowledge about tax and find out if you are a tax expert.

TEST YOUR KNOWLEDGE

Challenge quiz: Tax 101 1. Organise yourselves into teams to play the Challenge quiz: Tax 101.

2. Read the rules then do the quiz.

(Or, you can use the questions to create your own review challenge activity for the Your tax module.)

3. You might want to allow lesson notes to be used during the quiz or have a review session before playing the quiz.

How to play the challenge quiz 4. Use the rules below to play the quiz:

„„ Each team chooses a topic from the Tax 101 module. „„ Each team must start by answering one 100-point question correctly before moving to the higher point questions. „„ If a team answers the question correctly, they earn the allocated points. „„ If a team answers the question incorrectly, the next team earns the opportunity to answer the same question. „„ A team has one minute to answer the question. The team can use that time to consult and agree on a response, before the nominated member provides the answer. „„ A team must have a total score of 600 points before they can attempt to answer a 500-point question. „„ Your teacher may apply penalties for students who call out answers or interfere with other groups. TAX 101 CHALLENGE QUESTIONS Points Topic 1: What is tax and why do we need it?

100 Define the term 'tax'.

200 Name two groups who pay tax in Australia.

300 Which level of government collects the most tax in Australia?

400 Who does the Australian Government collect GST for?

500 What is meant by the term 'tax-free threshold', how much is it and who does it apply to?

Page 57 Tax 101Challenge Quiz: Worksheet Ta x , Super+You. Take Control.

Points Topic 2: Tax: who, what, how and why

100 What are the three levels of government in Australia?

200 Which level of government raises stamp duty, land tax and payroll taxes?

300 Name three taxes imposed by local government.

400 What event led to the Australian Government taking over income tax collection?

500 What is meant by a regressive tax? Give an example.

Points Topic 3: How is tax revenue spent?

100 Identify one service provided by a state or territory government.

200 Name three services provided by local government.

300 Name two levels of government that provide health services.

400 Name one area of expenditure that all levels of government have.

500 Name three services provided only by the Australian Government.

Points Topic 4: The Budget: taxes and spending

100 How often is the Australian Federal Budget prepared?

200 What has to happen before the Australian Federal Budget can collect tax revenue and spend money?

300 What is meant by a budget surplus?

400 List in order the three highest sources of revenue in the Australian Federal Budget.

500 List in order the three highest areas of spending in the Australian Federal Budget.

Points Topic 5: History of tax in Australia

100 When did Australia become a nation?

200 What tax power did the states and territories give up to the Australian Government after Federation?

300 Why did the Australian Government introduce federal income tax in 1915?

400 What does the Medicare levy pay for?

500 What major changes were made to the Australian taxation system in 2000?

Points Topic 6: Role of the ATO

100 What is the main role of the ATO?

200 What is the main connection that most Australians have with the ATO?

300 List three ways people can contact the ATO.

400 Apart from taxation, what is another role the ATO performs?

500 How does the principle of self-assessment work?

Page 58 Tax 101Challenge Quiz: Worksheet Ta x , Super+You. Take Control.

Tax 101 Years 7-10 QUICK TAX TEST Worksheet YOU WILL: YOU WILL NEED:

„„ test your new knowledge about the who, what, how and „„ Answer sheet: Tax 101 – Quick test why of tax

TEST YOUR KNOWLEDGE

Test the tax knowledge you've gained from working through Tax 101. There are eight questions in this test. (Choose ONE answer for each item.)

1. Select the best option to identify which level of government would impose and collect this tax. a. Land tax ™™ Australian Government ™™ State or Territory Government ™™ Local Government

b. Income tax ™™ Australian Government ™™ State or Territory Government ™™ Local Government

c. Property rates ™™ Australian Government ™™ State or Territory Government ™™ Local Government

d. Departure tax on overseas travellers ™™ Australian Government ™™ State or Territory Government ™™ Local Government

e. Building permit ™™ Australian Government ™™ State or Territory Government ™™ Local Government

f. Stamp duty ™™ Australian Government ™™ State or Territory Government ™™ Local Government

g. Dog and cat registration ™™ Australian Government ™™ State or Territory Government ™™ Local Government

Page 59 Quick Tax Test: Worksheet Ta x , Super+You. Take Control.

2. Match the term with the definition of a type of tax. a. Progressive tax ™™ Tax rate increases as the income increases ™™ Same percentage of tax is levied for all taxpayers ™™ Same dollar amount of tax is paid by all taxpayers

b. Proportional tax ™™ Tax rate increases as the income increases ™™ Same percentage of tax is levied for all taxpayers ™™ Same dollar amount of tax is paid by all taxpayers

c. Regressive tax ™™ Tax rate increases as the income increases ™™ Same percentage of tax is levied for all taxpayers ™™ Same dollar amount of tax is paid by all taxpayers

3. Which level of government would provide these government services. a. Waste collection ™™ Australian Government ™™ State or Territory Government ™™ Local Government

b. Immigration ™™ Australian Government ™™ State or Territory Government ™™ Local Government

c. Defence ™™ Australian Government ™™ State or Territory Government ™™ Local Government

d. Water and electricity ™™ Australian Government ™™ State or Territory Government ™™ Local Government

e. Postage ™™ Australian Government ™™ State or Territory Government ™™ Local Government

f. Street signs ™™ Australian Government ™™ State or Territory Government ™™ Local Government

4. The major form of taxation revenue for the Australian Government is: ™™ Personal income tax ™™ Company tax ™™ Goods and services tax (GST) ™™ Petroleum excise

5. A surplus government budget is one where: ™™ Revenue equals spending ™™ Revenue is greater than spending ™™ Spending is greater than revenue ™™ None of the above

Page 60 Quick Tax Test: Worksheet Ta x , Super+You. Take Control.

6. A major function of the ATO is to: ™™ Set the level of taxes in Australia ™™ Collect all taxes paid by Australian taxpayers ™™ Make sure that the taxation levels are fair for all Australians ™™ Collect the goods and services tax on behalf of the states and territories

7. The ATO administers the following tax legislation: ™™ Collection of excise duty ™™ Collection of income tax ™™ Collection of Higher Education Loan Program (HELP) debt ™™ All of the above

8. In what year did these tax events occur? a. Medicare levy introduced ™™ 1895 ™™ 1901 ™™ 1944 ™™ 1984 ™™ 1985

b. Pay as you earn (PAYE) tax system introduced ™™ 1895 ™™ 1901 ™™ 1942 ™™ 1984 ™™ 1985

c. Capital gains tax (CGT) introduced ™™ 1895 ™™ 1901 ™™ 1944 ™™ 1984 ™™ 1985

d. States and territories gave up the right to levy customs and excise duties ™™ 1895 ™™ 1901 ™™ 1944 ™™ 1984 ™™ 1985

e. Income tax introduced in Victoria ™™ 1895 ™™ 1901 ™™ 1944 ™™ 1984 ™™ 1985

Page 61 Quick Tax Test: Worksheet