Wayne Swan and these guys are thinking along the same lines!
Personal Income Tax Reform 09
TIM COLEBATCH:
SUPERANNUATION tax breaks for high-income earners are set to be slashed as one of the first reforms from the Henry tax review, with Treasurer Wayne Swan warning Australians that there will be winners and losers when tax reform begins.
In a speech setting the scene for tax changes that could replace emissions trading as the most difficult issue for the Rudd Government going into next year's election, Mr Swan said the Henry review would include ''unpopular choices''. He appealed to Australians' sense of patriotism to accept what is good for the country.
He hinted that losers could include the big mining companies, which could see the resource rent tax extended to super-profits from iron ore, coal and other minerals.
States could also face pressure to scrap some taxes.
Ordinary taxpayers could be spared the need to file annual tax returns, with people able to ''complete their tax return with just a few clicks of a mouse''.
Tax expert Neil Warren forecast that the review would also propose lifting petrol taxes in line with inflation - a practice abandoned by the Howard government in 2001 - and increasing state land taxes.
Addressing a conference in Melbourne, Mr Swan said the Government would make quick decisions on some of the proposed tax reforms, but encourage debate on others.
Some options, he said, might not be pursued ''without a mandate from the people''. That implies the Rudd Government could repeat former Prime Minister John Howard's strategy in 1998 of promising to bring in a GST if he was re-elected.
Mr Swan said Treasury secretary Ken Henry, chairman of the five-member review, would hand in the report on Christmas Eve.
He implied that one change the Government would quickly adopt would be a redesign of superannuation tax breaks, which now give disproportionate gains to high income earners.
''Because superannuation contributions are taxed at a flat rate of 15 per cent, the value of concessions on contributions increases as a person earns more income'', Mr Swan said.
''Less than 2 per cent of taxpayers earn more than $180,000 each year, but they receive a concession worth 31.5 per cent of their contributions.'' By contrast, someone earning $35,000 a year would receive a benefit of only 1.5 per cent.
Mr Swan appealed to Australians to look beyond their own interests to the good of the country when considering tax changes. ''We need to recapture the spirit of the 80s and early 90s, when many meaningful reforms were achieved because we were all prepared to consider some short-term pain in return for long-term gain'', he said.
''Tax itself is the price that we pay for a decent society. And altering the way we tax people and companies provides one of the most effective means we have of achieving the community's wider social and economic objectives.''
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Friday, November 06, 2009
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2 comments:
The gist of the ACOSS submission appears to be: rich people need to be taxed more and steal money from the rest of us.
I actually agree with some of what they are saying. Our tax system is in need of reform, but simply making the income tax system more progressive won't fix it. What will end up happening, as usual, is the middle income group taking it in the shorts.
Why don't we start off with making the top marginal rate, the company rate and a CGT rate all the same. Let's say, somewhere between 25 and 35%. We then raise the tax free threshold to double or more of it's current value to make sure that low to middle income earners aren't paying too much. We also get rid of most of the deductions that distort the system and allow people to take a simple, standard deduction every year (I believe Ken Henry has suggested it), which reduces compliance costs. Finally, please can we have "married filing jointly" status like the US?
One other suggestion: can we please have the tax brackets indexed to inflation or rises in income. Bracket creep really irritates me. Either that, or flatten the existing brackets further.
Will Swan & Co entertain progressive change, or piroette, Costello & Co style, and place public on ignore*?
ACOSS - Key benchmarks for reform:
- removing the 50% discount for capital gains
- replacing tax breaks for super contributions with a simple Government Co-contribution that favours low and middle income earners
- removing opportunities to shelter income in private companies and trusts.
*Place public on ignore:
"As previously announced, the Government considers that it would be inappropriate to change existing arrangements relating to capital gains or negative gearing. The Government has improved incentives to save and invest by introducing an internationally competitive capital gains tax regime. The Government will therefore not be conducting a review of the tax system with respect to housing or changing the capital gains tax provisions."
In other words, property portfolios before people. Thank the 'Liberals' for regressing the social economy.
Also, agree with comment re index tax thresholds.
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