Taxation as a Component of Financial Literacy: How Literate are Australians in Relation to Taxation

Abstract

In times of global economic uncertainty and in a climate of increased consumer responsibility for financial decisions, maintaining a financial environment where consumers are protected from risk and continue to have opportunities to create wealth should be critical for governments, business and administrators. A financially literate population could be part of the solution to avoiding crises of the past and in obtaining economic prosperity. The Australian Government has recognised that for those with the lowest levels of financial literacy, specific financial literacy programs can equip them with the appropriate financial skills and knowledge to ensure they can make well informed decisions and be less vulnerable to scams and market risks (Commonwealth Department of Treasury, 2006). The Australian National Financial Literacy Strategy outlines the importance of having sound financial literacy skills due to “changes in demography, and increased consumer responsibility for superannuation decisions and retirement incomes” (Australian Securities and Investments Commission, 2011, p. 4). One of the main aims of increasing the overall financial literacy of populations is creating an environment where consumers have the knowledge, skills and confidence to protect themselves from financial risk. However, if these programs aimed at increasing financial literacy are to be successful, it is imperative that all the critical elements of financial literacy have been considered. Furthermore, comprehensive and consistent frameworks for how to measure each of these critical elements need to be explored through academic research.