Monday March 30, 2015
In response to the Treasurer’s launch of the Government’s Tax Reform White Paper at our tax reform breakfast in Melbourne this morning, ACOSS argued that tax reform is the key to resolving our long term public Budget problems. The tax system should be redesigned and strengthened so that people contribute to the cost of services according to their ability to pay.
“We welcome the dialogue on tax reform opened up by the release of this discussion paper. It’s an opportunity for the community and business to take the initiative: these hard issues can’t be left to Governments alone,” ACOSS CEO Cassandra Goldie said.
“People understand we have a public Budget problem: they want solutions that don’t impose the greatest burden on the least well off. To solve our public Budget challenge in a way that’s fair and economically sensible, we must reform the tax system.
“Instead of searching for Budget savings in community services, charging more for doctor’s visits, denying young people income support for six months, or reducing the future value of pensions, Governments should clean out the ‘hollow logs’ in our tax system.
“It is too easy for people with high incomes to avoid paying their fair share of tax through devices such as negative gearing and private trusts, for some international companies to artificially shift their profits elsewhere, and for retired people with substantial assets to churn their income through their super accounts to reduce tax.
“If too many people play the tax avoidance ‘game’ then either tax rates will have to rise or essential services will wither on the vine.
“The starting point for tax reform should be to strengthen the fairest taxes, especially taxes on income, and to make them more efficient. Too many investment decisions are made for tax reasons and that’s one of the reasons we have over-investment in housing that drives costs up for everyone.
“Tax reform must not be reduced to a narrow argument over increasing taxes on consumption such as the GST. This would concentrate the risks of reform on those least able to bear them: people on low incomes. A tax on bank deposits is a consumption tax since it will be passed on to consumers, just as the former State Government bank deposit taxes were. We should not start the process by ruling things out.
“Tax reform would not be complete without a restructure of State taxes. The States lack a solid revenue base to fund future health, education and community services. There is a broad consensus that the least efficient taxes include Stamp Duties and insurance taxes, and the State Governments should make better use of Land Tax and Payroll Tax.
“There will be a degree of cynicism about Governments starting a ‘conversation about tax reform’ rather than simply making decisions. We don’t share that view. One of the main reasons the public rejected the 2014 Budget is that the Government didn’t take people into their confidence by clearly explaining the problem, or listen to alternative views on how to fix them.
“We need a different approach to an issue as tough and as important as tax reform,” Dr Goldie said.
In response to the Treasurer’s launch of the Government’s Tax Reform White Paper at our tax reform breakfast in Melbourne this morning, ACOSS argued that tax reform is the key to resolving our long term public Budget problems. The tax system should be redesigned and strengthened so that people contribute to the cost of services according to their ability to pay.
“We welcome the dialogue on tax reform opened up by the release of this discussion paper. It’s an opportunity for the community and business to take the initiative: these hard issues can’t be left to Governments alone,” ACOSS CEO Cassandra Goldie said.
“People understand we have a public Budget problem: they want solutions that don’t impose the greatest burden on the least well off. To solve our public Budget challenge in a way that’s fair and economically sensible, we must reform the tax system.
“Instead of searching for Budget savings in community services, charging more for doctor’s visits, denying young people income support for six months, or reducing the future value of pensions, Governments should clean out the ‘hollow logs’ in our tax system.
“It is too easy for people with high incomes to avoid paying their fair share of tax through devices such as negative gearing and private trusts, for some international companies to artificially shift their profits elsewhere, and for retired people with substantial assets to churn their income through their super accounts to reduce tax.
“If too many people play the tax avoidance ‘game’ then either tax rates will have to rise or essential services will wither on the vine.
“The starting point for tax reform should be to strengthen the fairest taxes, especially taxes on income, and to make them more efficient. Too many investment decisions are made for tax reasons and that’s one of the reasons we have over-investment in housing that drives costs up for everyone.
“Tax reform must not be reduced to a narrow argument over increasing taxes on consumption such as the GST. This would concentrate the risks of reform on those least able to bear them: people on low incomes. A tax on bank deposits is a consumption tax since it will be passed on to consumers, just as the former State Government bank deposit taxes were. We should not start the process by ruling things out.
“Tax reform would not be complete without a restructure of State taxes. The States lack a solid revenue base to fund future health, education and community services. There is a broad consensus that the least efficient taxes include Stamp Duties and insurance taxes, and the State Governments should make better use of Land Tax and Payroll Tax.
“There will be a degree of cynicism about Governments starting a ‘conversation about tax reform’ rather than simply making decisions. We don’t share that view. One of the main reasons the public rejected the 2014 Budget is that the Government didn’t take people into their confidence by clearly explaining the problem, or listen to alternative views on how to fix them.
“We need a different approach to an issue as tough and as important as tax reform,” Dr Goldie said.
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