The Howard government was the last to make any real tax reform
The Howard government’s incentive based GST tax policy was Australia’s last substantial tax reform that stood the test of time. Why? Because it increased productivity and created sustained growth. As Howard put it ‘not a new tax, a new tax system’. The tax framework was engineered to simplify the tax system and achieve stronger sustainable growth, higher productivity, more jobs and rising living standards. History shows us that it did just that!
But now in 2022 and with a new government, the Australian Labor Party (ALP), we are in desperate need of real tax reform that has long term strategic objectives alongside a broader coordinated policy approach that fosters incentive, security, consistency, and simplicity.
Australia’s cumbersome outdated tax system fuelled by decades of ‘do nothing attitude’ by the government is just another weight helping to sink Australia’s economy alongside a complete lack of economic strategy and policy reform.
As the financial review puts it, ‘The bleedingly obvious problem is that too much of Australia’s tax burden now falls in the wrong places – on income rather than on consumption’.
We have the second highest government revenue from personal and company tax in the world and with a very uncompetitive 30% company tax rate, big business has no incentive to earn revenue on Australian soil.
We spend a lot of taxpayers’ money weeding out large corporates that slip through our very complex tax system rather than giving them an incentive to pay tax in Australia.
As a result, we earn very little tax comparatively from large international businesses and our high personal income tax discourages Australians from working and investing.
Whilst the ALP will be passing on the previously legislated ‘stage three’ tax cuts, these changes come nowhere close to the urgently needed overhaul of the tax system.
The ALP, just like the previous Liberal government believes that pumping money into construction and housing solves everything. The Liberals propped up an already booming property industry, inflating house prices, rents and cost of goods which caused the current housing and construction crisis. Now, the ALP thinks they didn’t go far enough. They will add more fuel to the fire by introducing the Equity Contribution Scheme.
We have 12.8 million women in Australia, many of whom could contribute significantly to job growth, wage growth and income tax revenue if the government simply covered the cost of childcare. We can say what we like about equity, but the fact is the majority of the childcare burden falls on women. Even with the proposed changes to the childcare subsidy, the financial incentive for women is to work fewer hours, not more.
We have a renewable energy sector that is desperate to grow, create jobs and pay tax but instead of subsidising the market and allowing it to flourish, we kick it down with levies.
- Cut the corporate tax rate to 17% to compete with Singapore (17%), the UK (19%) and the USA (21%).
- Simplify and reduce personal income tax across the board (not just for high income earners).
- Give women the resources and incentives to work.
- Subsidise the renewable energy market.
Now that’s tax reform that will strategically change our economy for the better for years to come and put money into all Australian pockets.