The ATO and social solidarity

Jessica Gilbey, a 25-year-old PHD student, won’t see a cent of the payments even though she lives on a piecemeal casual income that is often less than $100 a week. Technically, she did not pay any tax in 2007-08 so she will not receive the payment.

“I was completely devastated,” she said. “You feel left out, you feel like you’re not a citizen.”

SMH, 6 April 2009

Ms Gilbey strikes me as a truly pathetic individual if her sense of social solidarity and citizenship comes from whether the tax office sends her a handout, which is a symbol not of social membership but a once-off do something, anything response to a slowing economy.

And what is ‘technically’ paying no tax? I think what they mean is that ‘technically’ she did pay some small sums in 2007-08, but the ATO has already given it back to her, meaning that her net tax payment was zero.

I’ve heard quite a few complaints along these lines, none of which I have any sympathy for. It’s just an example of how the welfare state brings out the worst in people, encouraging them to whinge about not getting handouts instead of working.

Update:
Jessica Gilbey says she was misquoted.

22 thoughts on “The ATO and social solidarity

  1. Keep in mind that those who are only temporarily paying no tax, such as Jessica Gilbey, will likely have to pay higher tax in the future to pay off the deficit created by the stimulus.

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  2. Less than $100 a week? Then why isn’t she on some kind of income support? Oh wait, maybe she’s got a scholarship that pays $400 a week tax free. Lots of RHD students seem to think that’s not really income but a kind of academic prize.

    It’s drawing a long bow to link it to the welfare state. Retired yank ex-military living in the Philippines are whining that they won’t get the latest stimulus payment and it’s only $US250. I think people just hate to miss out on something for nothng, a bit like when the flight attendant forgets to give you the pack of peanuts that everyone else got.

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  3. It is the case, however stupidly, that some people have already factored an extra, tax free $900 this month into their budget. Bit like the apparent impression Howard gave that he would keep interest rates from going up. I’m thinking the long term political impact will be similiar for Rudd but on a lower scale.
    I do have to agree though that her “not a citizen” comment was pathetic, but I’ve come to expect such things out of the SMH.

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  4. “Ms Gilbey strikes me as a truly pathetic individual…”
    Andrew, that’s a bit harsh!

    Her income must be very variable but couldn’t be $100 a week on average unless she’s being supported in other ways. The comment about citizen status is silly.

    It was completely confirmed to me during the last local council elections that a large number of people are self-interested to an astonishing degree. The comment sounds like an example.

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  5. Her income must be very variable but couldn’t be $100 a week on average unless she’s being supported in other ways.

    I’d guess living at home. That’s how I’m getting away with being unemployed. If I wasn’t living with my long-suffering parents I’d go and get a job.

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  6. As a 25 yo PhD student its quite possible she has never paid any tax. Until I finished my PhD at 25 (on an APA) I paid almost no tax (maybe $1K due to some research assistant work) and enjoyed $75K direct of government support and at least that much again in funding to the research programs I worked on.

    If you want to feel like a citizen then we could abolish the tax-free threshold of $6K a year.

    The arbitrary nature of who does and doesn’t get free money does grate on many people, those people primarily being those who miss out. The first stimulus package was terrible, this second one where I get some cash is great.

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  7. It was a silly comment but no doubt the journo kept asking around until he found someone willing to say something silly.

    But this package is indeed very arbitrary; no problem as far as the macroeconomics go, but lousy politics. If you were a student last year and working this year you get nothing. If you were working last year and are a student this year, you get two payments.

    It would have been a lot better to have matched Centrelink and tax records to ensure people only get the payment once, and then have a provision for people who missed out entirely to claim it as a one-off from Centrelink.

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  8. Arrr come on, if you paid tax last year you get a bit back, really doesn’t seem that different to one off tax break. What exactly is the issue?

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  9. As another student who almost qualified but fell a few hundred dollars short of paying net tax, I think the issue is that we’ll be on the front lines to pay for others’ handouts but won’t receive any of it. I don’t see why the stimulus effect would be any less if you gave the money to a scholarship student as opposed to a student on YA.

    It’s seems arbitrary to me, but I can’t say I’m devastated!

    My education is being very heavily subsidized – sometimes you win, sometimes you lose.

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  10. From my recollection, I said that I felt disenfranchised, not devastated (devastated sounds quite melodramatic). Not only was I misquoted, but I believe that what I said was taken out of context, even though the general idea the article implied was still quite accurate: I was left out, everyone should receive the stimulus payment, everyone who is a student or a worker or a citizen of this country. I was explaining that as a low-income student, I would be spending the money right away; on books, living expenses etc., not saving it or spending it overseas, therefore I would be directly contributing to the economy.

    I am struggling financially, and I was asked for comments on how I would spend the package, which I explained to the reporter I would not be receiving, despite the implications the decision has for our financial futures as a collective whole.

    Once again, we are left out. We don’t receive student benefits, I don’t personally receive the APA scholarship, and I am a full-time student who is unsure why we haven’t been represented in the amendment made to include APA students.

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  11. Would the stimulus or part of it be better spent on more APA scholarships, or slightly better paid ones? Maybe then I could come back from LSE after October and do a PhD in Australia 😛 It does seem, based on my “hunch”, that the scholarships system here in the UK is better structured and more people seem to have them through organisations like the ESRC. But that might just be my “hunch”… There seem to be more studentships too with specific PhD topics which people are hired to work on.

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  12. My understanding of economics is limited however the ‘fiscal stimulus package’ at the centre of the debate seems more of a tax offset or prospective tax cut rather than a government handout administered by the ATO. A tax cut can only ever benefit a tax payer.

    Perhaps Rudd & Co. could consider a separate support scheme for students such as text book subsidies as well as expanding the eligibility requirements for centrelink benefits. Fortunately I am eligible for the $900 because my text books cost $870!

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  13. This is the key point: “I was left out, everyone should receive the stimulus payment, everyone who is a student or a worker or a citizen of this country.”

    Jessica, why “should” everyone receive the payment? What is the policy reason? Should the government target the payment to particular classes of persons (e.g. those more likely to spend it or those for which giving the payment costs less administratively)?

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  14. I agree with Jessica’s point.

    There is a randomness to who does and does not qualify. That some people in very similar circumstances are left out and others get a big wad of cash. In theory if all your peers get the money and you don’t it pushes up the cost of certain things like rent.

    As a thought experiment. Married couples with 2 children get $50K, unmarried couples with 2 children get nothing, couples with 0, 1 or 3+ children get nothing, singles get nothing. The idea is to dump government money into the economy, fairness and logic are not of primary importance.

    There is a second issue which is how postgrad students are treated financially. They don’t qualify for concession travel, they don’t qualify for YA, they don’t get unemployment payments. PhD scholarships are great if you get one (very competitive at a lot of institutions), but there is no love for those who don’t.

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  15. Well the stated objective of the payments are to stimulate the economy, why then shouldn’t everyone receive them, especially people who have earnt too little to pay any tax?

    Aren’t they supposed to be more likely to spend their payment than someone on, say $80K a year, who is probably more inclined to save it.

    I would have thought it would make more sense to give the payment to everyone who had lodged a tax return rather than those who had lodged a tax return and earnt over the $6000 threshold.

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  16. I’ve a question regarding why it’s better to give it to people who will spend it now rather than latter. I’m not having a go, just wondering.

    Isn’t there an argument that the money should only be given to people who will save it? Therefore keeping it in the bank so that the bank can lend it to people? Can’t that also stimulate the economy?

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  17. Sacha, have you been listening to the news? Some dead people were eligible for the payment. DEAD people… I’m pretty sure Ms. Gilbey would be more likely to spend her cash and boost the economy than a dead guy.
    If anyone “should” get this payment, being “alive” should be one of the criteria for eligibility.

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  18. Amanda, yes I’ve listened to the news – do the payments to dead people go to their estates? I don’t know.

    I don’t know the rationale lying behind the decision about which people would receive the payment. But I’d guess that it included that the pyament wouldn’t go to people earning a fairly large amount – or targetting it moreso to people earning less (the income type-test) and administrative ease. The biggest bank for the buck so to speak. No doubt treasury had a think about the costs and benefits involved in targetting the payment to different groups of people.

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