We should remember the purpose of taxation – it’s to pay for a wide range of services that governments provide to us.
On Friday, a former top econocrat did something no serving econocrat is allowed to do, and no politician is game to do: he set out the case for us to pay higher, not lower, taxes.
But Keating says we should remember the purpose of taxation. It’s to pay for a wide range of services that governments provide to us either directly or collectively . Some services we get while we’re young, some when we’re middle-aged, and many when we’re old. Indeed, he says, history suggests that our demand for these services, such as education and health, tends to rise rapidly as economic growth causes our incomes to grow. They’re what economists call “superior goods”. The better off we get, the more of our income we devote to them.
Keating has thought of no less than seven areas where there’s little doubt that we need to spend more.
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