INTHEBLACK April/May 2024 - Magazine - Page 22
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22 INTHEBLACK April/May 2024
– we must see a shift away from income tax
as the key revenue source. We want to see
reductions in the company tax rate as well as
a rebalancing of individual income tax rates.
“This means the GST base needs to be
broadened. We need to look at simplifying
how we collect GST, and we may also need
to look at increasing the rate.
“We are not supportive of inheritance or
death taxes, and that is because a lot of the
time those assets are from post-tax income.
We want to see a system where income or
assets are taxed at the right time, and we
believe that should occur during someone’s
lifetime,” Kasapidis says.
Former Grattan Institute CEO Danielle
Wood, who is now chair of the Productivity
Commission, says the implication of not
taking policy action is that future generations
will need to bear the costs.
“Ultimately, there are three levers that
governments can pull to address long-term
budget challenges – they can make
economic reforms to ‘grow the pie’, they
can increase taxes, and they can reduce
spending,” Wood says.
However, higher growth alone will not be
enough to close the budget gap, she adds.
“Given the scale of the challenge,
governments will also need to find ways
to reduce spending and/or boost revenue.
After a decade of looking at this challenge,
I have come to the view that we will need
to do both.
“The scale of the challenge, and the
greater buy-in that can be achieved when
the costs are spread across the population,
are arguments for looking to both sides
of the budget for answers.
“More and more, questions of sustainability
and intergenerational fairness are raised
about our current tax mix. Expect them
to get louder and louder over the coming
decade without action.”
Leading independent economist Chris
Richardson says government spending should
be the “go-to” lever to pull, rather than just
focusing on taxes to improve fairness.
“Spending really helps the low end, while
taxes relative to income even out for pretty
much everybody, they are equally negative,”
Richardson says.
“There is a range of things that you can
do. We do tend to get a little lost – perhaps
particularly the financial press – assuming
the things government can do to raise living
standards and prosperity, are about tax.
They are not.
“Now, some taxes are spectacularly dumb,”
Richardson argues. “The most notable one is
stamp duty. Every time you raise a dollar in
stamp duty, you are shrinking the economy
by almost a dollar. Whereas, for example,
land tax has a very low efficiency cost.
“If you could get rid of stamp duty in
Australia and raise that money through land
taxes of various kinds, you would be raising
average Australian incomes. In other words,
some of the best tax reform measures we can
do in Australia are at the state rather than
the federal level.”
SPEARHEAD THE PUSH
Independent member of parliament Allegra
Spender has been spearheading a push to
unite academic, business and civil society
leaders to build consensus on the need
for tax reform and the way forward.
