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Years 7-10 101 Interactive - Shaping the system DEVELOPMENT OF 'S TAXATION SYSTEM Fact sheet What is Australia's history in terms of tax events? What were the issues around these events and what was the context of the time? Challenge your preconceptions about policy systems through history.

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 | 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 to set up a penal colony, bringing with it a Royal Instruction to impose as necessary. Soon after, wharfage fees and importation duties on wine, spirits and beer are imposed.

2. The Rum Rebellion (the only armed takeover of an ) 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 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. establishes an on its citizens, and all the other colonies progressively follow.

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

1. The brings in the Australian Government customs and system and provides the constitutional authority for an Australian Government income tax.

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, 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.

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 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 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).

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

„„ synthesise and present information about tax events in a „„ Fact Sheet: Interactive - Shaping the system - Development decade of Australia’s ’s taxation system „„ draw conclusions about the interrelationship between tax, society and economy

In this task, your group will research and report about a decade of taxation events in Australia’s history and how this shaped Australia’s current tax ‘landscape’. BUILD YOUR KNOWLEDGE

1. 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 „„ Read notes of tax events collated by your teacher following Activity 5: History of tax in Australia.

2. Having been assigned an era of about 50 years in Australia’s history, locate and synthesise information from your sources to create a chart that describes and explains:

„„ events of the era that relate to tax „„ the nation’s circumstances at the time, for example, war or economic growth „„ effects of society and the economy on tax „„ effects of tax events and issues on society and the economy. DRAW CONCLUSIONS

3. Develop a conclusion about the nation and tax at that time.

4. Display your chart aside other groups’ charts so that a timeline sequence is created.

5. Be prepared to be chosen randomly to report on your era and conclusion.

6. In your groups:

„„ discuss overall patterns and big understandings relating to all eras presented in the charts „„ develop a conclusion that shows the relationship between society and tax since Australia was colonised: How has society shaped the evolution of tax in Australia and how has tax shaped society?

Go online. Try the interactive version of this activity: https://www. taxsuperandyou.gov. au/sites/default/files/ interactives/shaping- the-system/index.html

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Years 7-10 Tax 101 Interactive - Shaping the system 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 . 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 12,000 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 35,000 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.

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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 , 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 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 taxes are working for Issues such as taxation policies, 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.

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

„„ analyse the purpose and design features of infographics „„ Fact Sheet: Interactive - Shaping the system - The „„ design and create an infographic that shows how Australian 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. „„

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

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.

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Years 7-10 Tax 101 Interactive - Shaping the system 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 „„ no one pays income tax and other taxes support the funding of community services „„ no GST on goods and services „„ increasing /export .

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.

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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?

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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 (Part A). https://www.taxsuperandyou. gov.au/sites/default/files/ interactives/tax-in-your-comm/ index.html

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