The T-shirts carried the slogan: “”My Daddy loves me because I’m a tax deduction”.
Though tongue in cheek, the slogan expressed the stereotype. Slobby man not taking much interest in the kids education and care, but just in the money.
This week’s child-care cash rebate, might not change the attitude of fathers (other social changes will do that), but it is certainly a big change in government and bureaucratic thinking.
The claims by (mainly) women to get some sort of equality and justice in the tax system go back a long way.
As more women came into the workforce, the need for child care grew. Women quite reasonably started asking questions about the child-care burden. Why, for example, was it good enough for the state to provide and insist on education for children aged five to sixteen, why didn’t it have a role for children under five? Why should that burden be put virtually solely upon women.
The Institute of the Family Studies has well-chronicled the fact that women have carried the primary burden on child care, despite their additional burden of going out to work.
Why, women have reasonably argued, should the state use the nation’s collective wealth to do things for what essentially male parliamentarians see as the collective good _ like providing roads, and guns _ and yet not provide child care. Surely, child care is as an essential part of nation-building as roads and guns?
The state slowly came around, and helped fund child-care places. This usually took the form of buildings, playgrounds and the like. It did not take care of the bulk of the day-to-day expense, like the state did with primary and secondary education.
Moreover, the state’s increased interest in child-care was sometimes idiotic and self-defeating. Cheap, Mrs-Jones-around-the-corner child care was effectively stymied by new bureaucratic requirements for low-seat dunnies, rails next to stairs and a myriad of other things that Mrs Jones could not install. Other requirements for a certain number of single-parent or Aboriginal children in all funded centres also back-fired. There were fewer dads at working bees in smaller centres.
However, the main anger of women was directed at the tax position of child care. This was only remedied this election campaign with the Coalition’s promise to make child care deductible and with Mr Keating’s cash promise this week _ about two decades too late.
More than two decades ago, women started to get outraged that claims for tax deductions for child care were getting routinely knocked back by the Tax Office. Meanwhile, businessmen were growing fat on the tax-deductible business lunch and driving back to work from them in tax-deductible company cars.
They argued that women simply could not go to work unless their children went to child care. They went to work to get an income on which they were assessed tax. Surely, the child-care expense which made that possible could be a tax-deduction. Wouldn’t that be fair and just?
A case went to the High Court in 1972. A Ms Lodge (referred to in the judgment without a given name, just as “”the taxpayer”), was appealing against the Tax Office’s refusal to give her a deduction.
No, said the court. Child care was a personal, private expenditure, even though it was necessary before an income could be earned. Section 51(1) of the Income Tax Assessment Act provides deductions for “”all losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income.”
The court said that this meant the expenditure had to be connected to the income-producing activity.
It is necessary for employees to wear clothes to work and to wash, but clothes and soap are not deductible. They have no connection with the work.
It was a technical distinction. Throughout the late 1970s and early 1980s more women objected to the refusal of tax deductions. I recall in 1981 a member of a taxation board of review getting quite exasperated. “”The law is settled,” he said. There would be no deductions for child care. It was now a matter for the legislature _ which was full of men and did nothing.
Two more cases went to the Federal Court without success. One was brought by a man. He obviously thought it was better for him, rather than his wife, to claim the deduction because he had the larger marginal tax rate.
The galling thing for women was the huge amount of money they had to outlay to get an income. The tax system was unfair and unjust. In effect, women moving into often fairly low-paid jobs had the highest marginal tax in Australia. Or certainly the lowest percentage of disposable income of any group in Australia.
The tax system was unfair, too, in claims for dependants. Until Bill Hayden converted deductions into rebates, those on high incomes got the best return. It usually went to the male _ “”My Daddy loves me I’m a tax deduction.”
Women rightly felt disempowered. Even with rebates, there was a difficulty. They often came in a lump sum at the end of the tax year. It came in a lump sum, and went in a lump sum. That meant fewer spending decisions for women.
The family allowance in the Hawke-Keating period changed that. It is paid fortnightly into the woman’s bank account. That is empowering. And it ensured money actually was spent on kids’ welfare.
Now, at last, child care is to be in effect tax deductible. Of more importance the money is to be paid in cash, weekly. That puts the money when and where it should go.
One of the most insidious, disempowering tax moves ever suggested was that of taxing the family unit as a whole, rather than the individuals.
The idea was mooted by the Fraser Government, but never enacted. The theory was that a (usually) man with dependent wife and kids paid much more tax than if the same total income were earned by the man and woman separately. It was thought this was unfair to the family. Thus a man on $50,000 would lose $15,000 in tax. A man on $30,000 and woman on $20,000 would lose only $10,000 in tax. The trouble with the averaging proposal was that the man’s overall tax rate would fall and the woman’s would fall. She would get less take-home pay and have to ask, beg, plead with her husband to yield up money each week to counteract the tax averaging position. The husband, of course, would see such a request as dipping into his wage packet.
The promise by the Keating Government give cash rebates to (mainly) women for child care goes to the heart of the issue. It is not just how much money a government provides, but how it provides it. The cash rebate system is admittedly administratively awkward, costly to deliver and generally inefficient. But that is not the point. This promise is about empowerment. Even at this seemingly small level, cash in a woman’s purse so she can spend it a she sees fit is a far more appealing method of getting child-care help than in lump-sum end of year tax-rebate payments which get spent as a lump sum. Lump-sum spending involves the woman in only one decision a year; cash payments involve her in 26.
It is also better than lowering fees through subsidies. First, the subsidy might never flow through to fees. Secondly, if fees go down, it will be a matter of general family budgeting. Cash, even small amounts of it, is liberating and empowering.
It is not hip-pocket nerve; but hand-bag nerve _ a nerve far more responsible and sensitive to the care of children. Good politics and good sense.