Australasian Accounting, Business and Finance Journal (Jun 2011)
Weathering the Storm: Tax as a Component of Financial Capability
Abstract
In a time of global economic uncertainty, maintaining a financial environment where consumers areprotected from risk and continue to have opportunities to create wealth should be critical for governments,business and administrators. A financially capable population could therefore be the key to avoiding the crisesof the past and getting back to economic prosperity. The Australian Government has recognised that forthose with the lowest levels of financial literacy, specific financial literacy programs can equip them with theappropriate financial skills and knowledge to ensure that they can make well informed decisions and be lessvulnerable to scams and market risks (Commonwealth Department of Treasury 2006). However, if theseprograms are to be successful it is imperative that all aspects of financial capability have been considered. Thispaper will argue that there is a research gap in terms of what components should be considered (and thereforemeasured) as part of financial capability and specifically that taxation and to a lesser extent, superannuationhave largely been excluded in both the measurement and education program aspects. If taxation andsuperannuation are not seriously considered as important components of financial capability, there could notonly be risks to an individual’s financial position, but also significant risks to the broader economy, consumerwealth and the revenue base through poor financial capability.
