Ken Henry denounces the “unsuitable” tax system

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“All the other tax bases of the federation are not reliable from the tax point of view,” he declared.

He said the GST base is eroding, fuel excise taxes are threatened due to the electrification of the vehicle fleet, stamp duties are volatile, and the collection of fuel taxes is under threat. Corporate tax depends on the price of iron ore.

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He wants the government to rely less on traditionally levied bases by the Commonwealth, such as income tax, and focus more on royalties typically levied by the state on consumption, road use, land. and other natural resources.

“In many ways, we find ourselves where we were in the decades following World War II. It was a period characterized by unruly, partially funded, public spending with heavy reliance on fiscal brakes that punished innovation, enterprise, and effort, distorted the savings model, and rewarded tax avoidance and evasion, ”said Dr Henry.

“Counting on the tax brake to do its magic in the face of a mountain of public debt is understandable, but we must also understand that it is dangerous.

Failure to engage in reform would hurt economic growth, deprive people of opportunities, reduce available services and continue to generate intergenerational inequalities, he said.

Australian Banking Association chief executive and former Queensland Premier Anna Bligh, who was also speaking at the event, warned that there were difficult political realities to overcome for reform to be achieved.

“You are always going to have (…) a prime minister or a prime minister or several who have very little political capital even if they are far from an election,” Ms. Bligh said. “Their willingness to embark on something big or brave will always be limited. “

She said it was essential to consider mechanisms to remove it from political cycles and also urged to reconsider extending the federal government’s three-year term to four years. It would require a referendum. “If you want long-term thinking, even an extra 12 months helps,” she said.

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Deputy Treasury Secretary Maryanne Mrakovcic said successive governments have understood the problems of the fiscal restraint and acted to reduce the burden on workers.

“This is why over the past 30 years, as taxes have risen as a percentage of GDP due to rising average tax rates, successive governments have returned the tax burden to Australians in the form of tax cuts. ‘taxes.

“And this is a political practice pursued by the government through its recent personal income tax plan.”

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