The amount of tax we pay has increased by at least triple the inflation rate. No wonder we can't save.
Nothing annoys me more than politicians lecturing us on the poor savings habits of average Australians.
It happened recently when it was revealed that in the March quarter the average Australian spent $500 more than he or she earned.
This sparked a number of comments from politicians about how we have to pick up our act, take more personal responsibility for our financial actions and start a disciplined savings program.
"Inflation is running at just over 2 per cent and with the recent tax cuts there's absolutely no reason why Australians shouldn't be able to save we've never had a better climate to do so," remarked one politician.
Sure, household debt has been increasing and we need to concentrate on living within our means, but I started to wonder whether inflation was really 2 per cent (the Koch family weekly household budget seems to be blowing out consistently) and just how big an impact tax is having on our pay packet and ability to save.
Once you do the research the results are fascinating.
Let's take inflation. Yes, I agree that the consumer price index is hovering around 2 per cent but it's what makes up that figure which is important and can tell a different story.
Remember, the CPI is measured by a basket of items which supposedly make up the major costs of an average Australian household.
If you look closely, you see that the rise in the Australian dollar has certainly had a big impact on reducing the prices of imports such as cars and electrical goods.
But when you look at the essentials of life, such as food, clothing, health and education, the cost increases are way above the CPI average.
In the year to the end of March education costs had risen 7.8 per cent, health 6.5 per cent, housing 4.3 per cent and food 3.3 per cent.
On the flip side recreation costs dropped 2 per cent, transport 1.4 per cent and clothing 0.8 per cent.
So, the bottom line is that when it comes to rising costs, if you're pretty wealthy and have been able to take advantage of lower import prices through buying luxuries, such as cars and DVDs, you've been doing well. But if you're an average family whose household budget simply tries to provide the necessities of life, then your costs have gone up considerably.
But it's the tax take that riles me the most. The latest figures from the Australian Bureau of Statistics are up to the 2002-03 financial year and show that the amount of tax the average Australian pays has increased by at least triple the inflation rate. For people in some states, it's seven times the average inflation figure.
That's where our money is going and that's where the spare cash that should be flowing into our savings is flowing to governments at all three levels.
Just take a look at the statistics and remember, these are provided by the Australian Bureau of Statistics.
Total tax per head of resident population rose 8.2 per cent in that financial year from $11,108 to $12,018 that's quadruple the inflation rate.
The amount of tax paid to the Federal Government rose 8.4 per cent. On top of that the amount of tax paid to state and local government in NSW rose 5.8 per cent from $2,341 to $2,477 more than any other state.
In Victoria, state and local government taxes rose 5.3 per cent while the Queensland increase was 10.9 per cent.
