Have you ever wondered why your boss pays you in Australian dollars? Why, for that matter, do we work for money in the first place? Why not pay us with ice cream?

Because the government makes us work for dollars. Really.

Each year, working Aussies have to pay income taxes. And pretty much whenever you spend money, you have to pay GST. And the only thing the Australian Tax Office will accept as payment for income taxes or GST is Australian dollars. You can’t hand over mangoes or Bitcoin. It’s Aussie dollars or we’ll see you in court.

That simple rule ”encourages’ everyone to use Australian dollars, which is what ‘defines’ Australian dollars as our national currency.

Imagine if the government suddenly said, “We’ve changed our mind (and the Tax Act). From now on, you have to pay us in $US dollars.” If your boss kept paying you in Aussie dollars it would be a pain in the behind – you would have to convert your Aussie dollars to US ones in order to buy yourself everything from a Caramello Koala to a new car – because the supermarket or the car yard need $US dollars to pay the GST.

Australian dollars would lose their magic. Nobody would want them anymore. They’d want US dollars instead. (Although don’t worry – the Commonwealth Government would never be silly enough to ask you to pay taxes in anything other than the currency it issues itself).

So, taxes aren’t about “funding” government spending. They are mostly about creating demand for the currency in the first place. We all need Australian dollars to pay tax. And Australian dollars are issued by the Australian Government issues dollars in the first place when it buys things like a support worker’s time. So, people are willing to work as support workers so as to get a hold of dollars with which to pay their tax.

Taxes also help keep prices stable. When the economy overheats, higher taxes can cool it off by taking spending power out of people’s pockets.

And taxes are also a way of making things fairer. They remove some spending power from people who’ve managed to get their hands on lots of dollars. This increases everyone else’s relative spending power.

So next time you grumble about paying tax, remember — taxes don’t just take your money. They make your money matter. Without taxes your wallet would be full of worthless pieces of paper.