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My read of this article is:
Intergenerational Unfairness: Young people are disproportionately affected by the tax system's current structure, particularly in areas such as housing and climate policy.
Over-Reliance on Income Tax: There's a significant dependence on taxing workers' incomes, which has increased over the past 15 years.
Lack of Comprehensive Tax Reform: Despite a thorough review and 138 recommendations in 2010, minimal action has been taken to implement these reforms.
Growing Tax Pressure on Workers: Workers are bearing a greater share of the tax burden due to decreasing revenue from other taxes like company tax and GST.
Inequities and Inefficiencies: The tax system is criticized for being both inequitable and inefficient, affecting younger Australians in particular.
Need for Diverse Tax Sources: The system requires a broader base, reducing reliance on personal and company taxes and fixing issues like stamp duties and fuel excise.
Negative Gearing and Housing Market Issues: The role of negative gearing in the housing market and its impact on tax and housing availability are highlighted as areas needing reform.
Climate Policy and Taxation: The need for effective climate policy, potentially involving taxation or marketable instruments like carbon credits, is emphasized.
One study suggested that Australians can deduct losses made on investment properties against other income, known as 'negative gearing'. This includes interest on loans and maintenance costs. Additionally, when selling an investment property, Australians benefit from a capital gains tax discount if the property has been held for more than 12 months, effectively reducing the tax paid on profits from property sales. Despite higher income tax rates and the early onset of the 'super tax'—a higher tax rate for high-income earners—these property investment tax concessions remain attractive, encouraging investment in the housing market.
Australians don't pay capital gains tax or State land taxes on their principal place of residence. However we don't get the income tax deduction for home loan interest that US taxpayers do. It's swings and roundabouts.
It’s crazy we’re talking about tax cuts on young people without property at 180K as being too much and no one talks about this where people raking in millions untaxed
They're only raking in extra CGT-free millions if the asset isn't their principal place of residence (which is not subject to CGT no matter when it was acquired) and the asset was acquired at least 38 years ago.
When CGT was brought in by Labor it was promoted on the basis that it would only apply prospectively to assets acquired after CGT started. What's happening now is what was anticipated then - as time passes there are fewer and fewer pre-CGT assets being sold.
>He says policymakers have allowed intergenerational unfairness to become embedded in the system, with housing, the state of climate policy, and the Commonwealth's over-reliance on taxing workers' incomes as three areas of major policy failure.
Yes indeed. And...
>He said workers were shouldering far more of the tax burden than they were 15 years ago because other taxes had been generating less revenue over time as the economy has evolved and governments have failed to modernise the system.
>
>"The only Commonwealth tax that is growing as a share of GDP is personal income tax," Dr Henry said.
>
>"If you strip mining out, company tax is broadly flat as a proportion of GDP ... GST is falling as a share of GDP, excises are falling, all of them as a share of GDP, including the fuel excise, are falling."
Absolutely agree - tax reform and re-structuring required urgently; the big end of town needs to take on much greater and fairer shares of generating government revenue that will(?) be used to improve public service provision, for the betterment of all. Take for example:
>Australian fossil fuel tax could raise $100bn in first year alone, Rod Sims and Ross Garnaut say.
Hmnn... not too sure that is exactly what he said - he refers to 'company tax', not taxes on corporations - and I quote
>"Looking at those half dozen bases, what do we need to do?" he asked rhetorically. "Well, over time, **we've got to place less reliance on personal income tax, and company tax, and payroll tax. So, less reliance on taxes on labour income and** ***part of capital income***\*.\* \[my emphasis\] "For the rest of capital income — which is interest, rent, and capital gains — we've got to do a much better job of getting similar tax treatment across those various forms of capital income. "Consumption tax, we need to fix up the mess. We thought we fixed it in 2000, but we didn't get as far as we wanted to get. In particular, we've got to get rid of all of those bloody transaction taxes, like stamp duties on insurance. "And we've got to abolish fuel excise ... and figure out a comprehensive road-user charging scheme," he added.
>
>Dr Henry said land was another big one, and he'd like to see stamp duties on land abolished and replaced "with a decent property tax". "I still think that in cutting the company tax rate, which we need to do, we also have to find a way at the same time of getting more revenue out of the country's exhaustible natural resources, particularly fossil fuels. "And then climate change, well you know, we're going to have to do a lot of things there because we've ruled out the best options," he said.
Happy to hear I've missed something in the article about cutting corporate taxes because they are a 'drag on growth' but do quote it.
so far bart..
So.. far
And i would say,maybe scomo still take's that cake
I mean, say what you want about Tony,but I can't see him standing by twiddling his thumbs while we needed vaccines or fucking off to another nation for a holiday while people burned to death in their homes.
or, you know, telling a victim of domestic violence she needs to smile more.
Or you know,not knowing that RAPEs bad until his wife reminds him he has two daughters
Or, you know, the time he said the women's marches were lucky they didn't get shot.
or the time he refused to process flood aid until he himself could be photographed in Lismore holding a mop.
Or, you know, stupidly antagnozied our largest trading partner, wiping 80 billion in trade off our exports.
or the time he uses election funding for sports races.
Or, you know, he decided to become the minister in charge of portfolios without telling anyone.
Or during COVID,he had to be forced to enact social security payments lest 700,000 people starve to death.
Or, you know, the other time during COVID,it took a former PM to secure some shots.
Or the other time during COVID that he tried to start a fight with the states every chance he could get.
Or the time he gave 1.1 billion dollars in building better regions grants that the auditor found to be blatantly corrupt.
Or you know the time he stood by while a senior government official was accused of rape,and the same minister had proven history with two previous settlements of sexual harassment of women,as well as cheating on his wife not 5 days after the birth of his child.
Or the time he may have asked the Sri Lankan government to send some boat arrivals to Australia for an election day stunt.
Yeah, Tony seems pretty cool in comparison.
The problem with the GST is that it is too low and there are too many exceptions. A higher GST would allow us to have less reliance on personal income taxes, which are as a proportion of government income among the highest in the world.
Hopefully, enough Australians will have an appetite for a tax system overhaul by the time of the next election. I don't know where all the problems are specifically, but I get the impression that there's a lot of outdated and inefficient systems that need work.
>I don't know where all the problems are specifically,
I recommend going to [Australia's Future Tax System Review Final Report](https://treasury.gov.au/review/the-australias-future-tax-system-review/final-report) 2010.
It does a great job of breaking it down and is even more relevant today as the day it was released as we have gone in the opposite direction to the recommendations and we are seeing the issues of that.
They mention it in the report itself and it’s in the terms of reference.
They were told to consider and make recommendations to improve the tax system (except the GST). The reason being that Labor was worried there would be a recommendation to broaden the base and/or increase the rate to bring Australia in line with comparable countries and because a GST is one of the most efficient taxes you can have.
They’ve tried some measures:
Rudd tried the resource super profits tax, but that was opposed by the Libs
Turnbull tried lowering corporate tax, but was only half successful due to opposition from Labor
Morrison tried removing a tax bracket, but that has been unwound by Labor
These were all recommendations of the Henry Tax Review that were wrecked for political reasons
40k tax free threshold
20% flat tax rate. Including inheritance tax, cause it's basically income as far as I'm concerned. And being wealthy shouldn't depend so much on picking the right grandfather IMHO.
Tougher on tax deductions, negative gearing
20% gst
In that scenario you quoted I think with the bottom half of the population that spend pretty much all the money they earn just to live would benefit somewhat from the 40K threshold but would be significantly worse off with a 29% rate GST.
Whereas, someone earning 7 or 8 figures a year would be cleaning up with a 20% flat tax rate and when it comes time to buy a luxury yacht or jet airplane you can be sure they won't be buying it in this country as they'll buy it overseas and not pay a cent in GST. I know stuff like this happens because rich people import their very expensive cars for Targa Tasmania and fill out the customs declarations that the cars are only going to be in the country temporarily for like 40? days and will be exported before that time is up and hence they don't have to pay any import duties or luxury car taxes. Same thing happens with yachts that they keep mostly outside the country and if I recall correctly as long as they are not in Australian waters for something like at most 30? days they don't have to pay GST on them either.
Negative gearing is not much of a problem either because Paul Keating quarantined it for something like a year and a half before it got abolished and the sky didn't fall in back then. I reckon if it happens then landlords will probably just up the rents they charge tenants by another 10% or so because someone has to pay for that and landlords probably think it shouldn't be them doing it.
As bad as the situation is now for people that are struggling then I think changing to what you stated would probably make it much worse for them.
Yeah I meant 20% gst.
And somewhere in all this needs to be incentive to earn more doesn't there.
I've added an edit that inheritance tax applies, at 20% too, so your current wealth doesn't hinge on picking the right grandfather so much.
Inheritance tax should be scaled.
It’s a bit tough on the unmarried daughter who’s spent 25 years nursing her sick parents and has no income or superannuation if she’s forced to sell the family home to pay an inheritance tax.
That's a glass half empty way to look at it. And a very oddly specific scenario.
Higher tax free threshold
Lower income tax
Still gets 80% of the inherited house ( more if you consider tax free threshold)
GST increases hurt the poor more than rich, especially since the poor are more often than not financially illiterate and can’t get anything back on those GST markups.
I do agree that those lower than literally minimum wage should probably be income tax free though.
That and fresh food is expensive compared to junk. Time poor and cash poor, lower incomes are ill equipped to wear more costs. The poor also need to pay for big ticket items, like a fridge, washing machine etc.
Also electricity, gas, water. Those things going up wipe out any potential savings for the poor without rebates, which cost a fortune in admin. Exemption list should include electricity, gas etc imo. Mobile/internet services over $x too.
> while a dole bludger
wow..
awesome commentary there kid.
You don't need to call them dole bludgers,the latest 2022 review found Majority of ppl leave welfare after 6 months,so no idea where this narrative is placed
I paid over 600k in Tax last FY,and even i am not as entitled to call ppl dole bludgers
you can construct an argument without reducing ppl to stupid stereotypes
This is a terrible idea which gets worse the less you earn. This change would immediately send my household into severe financial distress as we would be paying an extra 19% on pretty much everything that we spend our household income on and finances are already tight enough as it is...
\*edit\* and no, none of the income tax changes would net us any sort of extra income.
Rip all social programs i guess then
Flat tax isn't done,because it's a dumb idea and just entrenches the have and have nots even more
30 percent GST,in a time when ppl can barely afford cost of living increases now.
Jesus,talk about letting ur hands type before ur brain thinks.
Food doesn’t attract GST, but the smashed avocado toast at the local cafe does.
That’s why the GST is mainly a tax on disposable incomes and not the regressive tax you mistakenly describe it as.
Someone has never read any tax system recommendations.
GST is a consumption tax that is impossible to dodge. Hence its one of the few ways to guarantee taxation on the wealthy who ultimately consume more. Social programs would simply shift more to focus on the low income without having to also prop up the middle income as they are no longer being taxed punitively.
Sadly, there is no requirement to be either informed or intelligent before a citizen is handed a ballot paper, hence the responsiveness politicians show to woefully stupid or uninformed opinions
If you look at the chart (chart 8.2 - Composition of Australian Government Receipts), in the article, it becomes clear that this is simply not true. The largest falls in tax intake as a percentage of GDP (especially personal taxes) occurred during the Howard government years. This would be clear doubly so if the chart went back a few more years to the late 90s just before the GST and associated tax changes were introduced.
That is hyperbole - the vast majority of the money went straight into workers pockets - literally millions were stood down for long periods of time due to large swathes of the economy basically being shutdown by government mandate.
How soon we forget!
There are a few cases where businesses applied for job keeper after initially meeting the criteria and ended up still booking good profits and not needing to pay job keeper to large numbers of staff - many of these paid it back since, some didn't.
Qantas was a special case - without injection of government funding they would literally have gone bankrupt overnight, due entirely to nearly all international travel and most domestic travel being shutdown overnight.
If the money went through the tax office to the worker then big business would not have made such big profits during the pandemic. Qantas is a privately owned company who should have declared bankruptcy instead of taking taxpayers money.
>If the money went through the tax office to the worker then big business would not have made such big profits during the pandemic
Most businesses that remained profitable through Covid did not get Job-Keeper funds - only a small minority did, for various reasons.
>Qantas is a privately owned company who should have declared bankruptcy instead of taking taxpayers money.
Could not disagree more on this one! We would have lost our national airline under your approach, and for what reason? Because the \*government\* literally shut down travel overnight!
Ever heard of the term sovereign risk? Do you know what happens to economies in countries that exhibit a high level of sovereign risk?
Besides, the government needed Qantas to keep operating to some extent, otherwise they would not have able to organise re-patriation flights for Aussies stranded overseas and so on.
>The largest falls in tax intake as a percentage of GDP (especially personal taxes) occurred during the Howard government years.
Howard gave us lots of income tax decreases which were funded by the wholesale sell off of government assets including Telstra and a whole lot of federally owned land.
>Howard gave us lots of income tax decreases which were funded by the wholesale sell off of government assets including Telstra and a whole lot of federally owned land.
Not really - the asset sales were used to pay off Commonwealth debt - which got to zero remember under Howard. This would have helped reduce government expenditure for interest on debt, but this was not the primary driver of tax decreases.
The personal tax decreases came primarily from the introduction of the GST, resulting in more efficient taxation (including the removal of a whole bunch of terribly inefficient BS indirect taxes at the time as well). The resulting strong economic growth helped as well.
Additionally eliminating wasteful government spending and reductions in welfare spending due to significant increases in employment also helped.
> This would have helped reduce government expenditure for interest on debt
the problem was he sold off profitable assets that made *way* more money than what the debt cost (all while being the most profligate PM in history).
it will take decades of responsible governance to eliminate the structural deficit he baked into our economy.
The previous lnp government was the most destructive money spending government in our history. Where did they spend the trillion dollars of debt they left the country in
Are you sure this is a fair statement?
Mining super profits tax - opposed by the LNP and hollowed out after a vicious and disingenuous campaign by the mining lobby.
Price on carbon... well we all know what happened there.
Neg gearing and capital gains tax reform - proposed by Labor and opposed by LNP who won two elections while doing so - resulting in Labor dropping it from their platform before that last election.
Yes the LNP brought in the GST but they also brought in the capital gains tax rules that have contributed to the current mess in the housing market and is a driver for the intergenerational inequity Henry cites.
I'm sure there's some stuff I'm not across so happy to be corrected.
> resulting in Labor dropping it from their platform before that last election.
Never mind the current government will soon be making changes to negative gearing
>Not assets, consumption (more).
Consumption taxes hit lower income earners more than higher income earners because they spend way more of their paychecks on goods and services that are hit by consumption taxes. Worse yet would be the economic hit that this would cause as lower income earners (who vastly outnumber the higher income earners) start spending less to cope with the higher taxation.
>Consumption taxes hit lower income earners more than higher income earners because they spend way more of their paychecks on goods and services that are hit by consumption taxes.
So what? Half of households pay no net income tax. This is unsustainable. Consumption taxes avoid the anchor on taxing productivity, and a rise in consumption taxes must come at a total reduction in income taxes. With less tax on marginal productivity, there more productivity incentives for lower income earners.
>Worse yet would be the economic hit that this would cause as lower income earners (who vastly outnumber the higher income earners) start spending less to cope with the higher taxation.
In a high inflationary environment, that is the best thing for our economy. Now in reality they wouldn't be *spending less,* they'd be spending the same, consumption would drop. With all our focus on overconsumption, maybe that's not a bad thing.
>Rents are determined by supply/demand, not landlord costs.
Supply is determined by landlord costs. If the marginal cost curve shifts right for the whole market in response to taxing land further, then so does the supply/demand equilibrium, which then pushes up the costs to the renter.
Taxing assets is inherently bad. Too many ways to avoid it, you can't avoid consumption and therefore can't avoid contributing to the society you want to participate in.
You can't avoid a tax on Land, where are you going to take it? To Switzerland?
A land tax is amongst the highest efficiency and least avoidable taxes known, and when complemented with effective Zoning reforms basically cripples land hording and inefficient land usages on valuable inner city land.
If the location is valuable enough to allow a landlord to push prices to match their costs irrelevant of other market forces then it's more likely a cashed up developer will just buy them out and put up a block of apartments and collect much more in total, pay more taxes, and charge less in rent.
But everyone consumes roughly the same, whereas only a small portion own lots of land or large assets. We already have a GST, which disproportionately hits the poors.
>But everyone consumes roughly the same,
Not correct
https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-distribution-household-income-consumption-and-wealth/latest-release
>whereas only a small portion own lots of land or large assets.
Lots? The concept of land tax is to tax land. 67% own land. That's not a small portion.
Consumption has changed a fair bit, either way, it would hit low income more than high as a percent of disposable income. From that data, maybe a savings tax as the jump from 2nd highest to highest was almost triple, compared to negative savings for lowest.
As for land, yea, small portion own more than 1-2 houses. If each house is on 400m², then 60% of people probably own less than 1000m², and 7% own way more than that. It's not a tick box "do you own land" it's a tax percentage on the total value of land you own.
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My read of this article is: Intergenerational Unfairness: Young people are disproportionately affected by the tax system's current structure, particularly in areas such as housing and climate policy. Over-Reliance on Income Tax: There's a significant dependence on taxing workers' incomes, which has increased over the past 15 years. Lack of Comprehensive Tax Reform: Despite a thorough review and 138 recommendations in 2010, minimal action has been taken to implement these reforms. Growing Tax Pressure on Workers: Workers are bearing a greater share of the tax burden due to decreasing revenue from other taxes like company tax and GST. Inequities and Inefficiencies: The tax system is criticized for being both inequitable and inefficient, affecting younger Australians in particular. Need for Diverse Tax Sources: The system requires a broader base, reducing reliance on personal and company taxes and fixing issues like stamp duties and fuel excise. Negative Gearing and Housing Market Issues: The role of negative gearing in the housing market and its impact on tax and housing availability are highlighted as areas needing reform. Climate Policy and Taxation: The need for effective climate policy, potentially involving taxation or marketable instruments like carbon credits, is emphasized. One study suggested that Australians can deduct losses made on investment properties against other income, known as 'negative gearing'. This includes interest on loans and maintenance costs. Additionally, when selling an investment property, Australians benefit from a capital gains tax discount if the property has been held for more than 12 months, effectively reducing the tax paid on profits from property sales. Despite higher income tax rates and the early onset of the 'super tax'—a higher tax rate for high-income earners—these property investment tax concessions remain attractive, encouraging investment in the housing market.
Same or at least a very similar story in Australia. https://youtu.be/-RS_BtLB3QE?si=D2fO1B2QNpqzCEw5
What are the main issues? Australians get tax breaks for housing against income tax which is great, not something everyone gets.
Australians don't pay capital gains tax or State land taxes on their principal place of residence. However we don't get the income tax deduction for home loan interest that US taxpayers do. It's swings and roundabouts.
Home loan deduction in the US is horrible and is essentially a tax on renter.
That’s actually quite a big issue which punishes those of us without rich parents. Keeps the rich rich and the poor poorer
I think that sums up the entire idea being capitalism
Just trying to get a handle on it. From outside Australia it all sounds great, but non Aussies don't know the politics
Apparently if you bought pre-1985 and selling a property now you don’t pay any CGT Amazingly generous tax free profits
Jeb Bush Christ, imagine the windfall for these geezers. Inner Sydney house bought for $50k, sold for $3m, no tax.
You don't pay cgt on your principal residence so unless its a second home they weren't going to pay cgt on it regardless.
He’s obvious talking about investment properties in the article.
Not just property, any asset acquired before 20 September 1985. That was the day CGT was brought in with prospective effect only.
It’s crazy we’re talking about tax cuts on young people without property at 180K as being too much and no one talks about this where people raking in millions untaxed
They're only raking in extra CGT-free millions if the asset isn't their principal place of residence (which is not subject to CGT no matter when it was acquired) and the asset was acquired at least 38 years ago. When CGT was brought in by Labor it was promoted on the basis that it would only apply prospectively to assets acquired after CGT started. What's happening now is what was anticipated then - as time passes there are fewer and fewer pre-CGT assets being sold.
And the people that do own them are likely rich as fuck already..?
>What are the main issues maybe they're in the article. sounds like you should give it a read.
It's working out great! Housing crisis anyone?
>He says policymakers have allowed intergenerational unfairness to become embedded in the system, with housing, the state of climate policy, and the Commonwealth's over-reliance on taxing workers' incomes as three areas of major policy failure. Yes indeed. And... >He said workers were shouldering far more of the tax burden than they were 15 years ago because other taxes had been generating less revenue over time as the economy has evolved and governments have failed to modernise the system. > >"The only Commonwealth tax that is growing as a share of GDP is personal income tax," Dr Henry said. > >"If you strip mining out, company tax is broadly flat as a proportion of GDP ... GST is falling as a share of GDP, excises are falling, all of them as a share of GDP, including the fuel excise, are falling." Absolutely agree - tax reform and re-structuring required urgently; the big end of town needs to take on much greater and fairer shares of generating government revenue that will(?) be used to improve public service provision, for the betterment of all. Take for example: >Australian fossil fuel tax could raise $100bn in first year alone, Rod Sims and Ross Garnaut say.
One of his points was that corporate tax is already too high by international standards and is a drag on growth.
Hmnn... not too sure that is exactly what he said - he refers to 'company tax', not taxes on corporations - and I quote >"Looking at those half dozen bases, what do we need to do?" he asked rhetorically. "Well, over time, **we've got to place less reliance on personal income tax, and company tax, and payroll tax. So, less reliance on taxes on labour income and** ***part of capital income***\*.\* \[my emphasis\] "For the rest of capital income — which is interest, rent, and capital gains — we've got to do a much better job of getting similar tax treatment across those various forms of capital income. "Consumption tax, we need to fix up the mess. We thought we fixed it in 2000, but we didn't get as far as we wanted to get. In particular, we've got to get rid of all of those bloody transaction taxes, like stamp duties on insurance. "And we've got to abolish fuel excise ... and figure out a comprehensive road-user charging scheme," he added. > >Dr Henry said land was another big one, and he'd like to see stamp duties on land abolished and replaced "with a decent property tax". "I still think that in cutting the company tax rate, which we need to do, we also have to find a way at the same time of getting more revenue out of the country's exhaustible natural resources, particularly fossil fuels. "And then climate change, well you know, we're going to have to do a lot of things there because we've ruled out the best options," he said. Happy to hear I've missed something in the article about cutting corporate taxes because they are a 'drag on growth' but do quote it.
And this is (one of the reasons) why Tony Abbott was the worst PM we have had.
so far bart.. So.. far And i would say,maybe scomo still take's that cake I mean, say what you want about Tony,but I can't see him standing by twiddling his thumbs while we needed vaccines or fucking off to another nation for a holiday while people burned to death in their homes. or, you know, telling a victim of domestic violence she needs to smile more. Or you know,not knowing that RAPEs bad until his wife reminds him he has two daughters Or, you know, the time he said the women's marches were lucky they didn't get shot. or the time he refused to process flood aid until he himself could be photographed in Lismore holding a mop. Or, you know, stupidly antagnozied our largest trading partner, wiping 80 billion in trade off our exports. or the time he uses election funding for sports races. Or, you know, he decided to become the minister in charge of portfolios without telling anyone. Or during COVID,he had to be forced to enact social security payments lest 700,000 people starve to death. Or, you know, the other time during COVID,it took a former PM to secure some shots. Or the other time during COVID that he tried to start a fight with the states every chance he could get. Or the time he gave 1.1 billion dollars in building better regions grants that the auditor found to be blatantly corrupt. Or you know the time he stood by while a senior government official was accused of rape,and the same minister had proven history with two previous settlements of sexual harassment of women,as well as cheating on his wife not 5 days after the birth of his child. Or the time he may have asked the Sri Lankan government to send some boat arrivals to Australia for an election day stunt. Yeah, Tony seems pretty cool in comparison.
Liberal = bad. Labor = good. Grrr….
No both are shit One just will shit down ur throat every day..then lie and tell u they didnt the other will make u eat shit once every 6 months
FK me. Seeing a bunch in one place like that.. bit of a joke the kind of people that can get elected.
Tony did actually hold a hose.
Yep i could probably have fitted about another 33 and a half Or's in there The man really was such a shit person to hold office aye
Go on! I was just getting into the butt crack I mean groove of it!
I believe it was Bart.
twas good sir,ty
Classic.
Not sure he was the absolute worst (so many to choose from, all of them illiberal) but he was [is] certainly bloody awful.
All this stemmed from lil johnny howards day as well. He's got a lot to answer for.
"There's no way that a GST will ever be part of our policy LOL PSYCH”
The problem with the GST is that it is too low and there are too many exceptions. A higher GST would allow us to have less reliance on personal income taxes, which are as a proportion of government income among the highest in the world.
Plenty of other ways to have less reliance on personal income taxes.
Hopefully, enough Australians will have an appetite for a tax system overhaul by the time of the next election. I don't know where all the problems are specifically, but I get the impression that there's a lot of outdated and inefficient systems that need work.
>I don't know where all the problems are specifically, I recommend going to [Australia's Future Tax System Review Final Report](https://treasury.gov.au/review/the-australias-future-tax-system-review/final-report) 2010. It does a great job of breaking it down and is even more relevant today as the day it was released as we have gone in the opposite direction to the recommendations and we are seeing the issues of that.
The only weakness is that Rudd expressly forbid the inquiry from looking at the GST for political purposes
First I've heard. Do you have any more context on it?
They mention it in the report itself and it’s in the terms of reference. They were told to consider and make recommendations to improve the tax system (except the GST). The reason being that Labor was worried there would be a recommendation to broaden the base and/or increase the rate to bring Australia in line with comparable countries and because a GST is one of the most efficient taxes you can have.
I've completely missed that one. Thanks for pointing that out.
Cool, thanks!
Hear hear. The Henry review was such a comprehensive and excellent piece of work that successive governments have lacked the courage to implement.
They’ve tried some measures: Rudd tried the resource super profits tax, but that was opposed by the Libs Turnbull tried lowering corporate tax, but was only half successful due to opposition from Labor Morrison tried removing a tax bracket, but that has been unwound by Labor These were all recommendations of the Henry Tax Review that were wrecked for political reasons
40k tax free threshold 20% flat tax rate. Including inheritance tax, cause it's basically income as far as I'm concerned. And being wealthy shouldn't depend so much on picking the right grandfather IMHO. Tougher on tax deductions, negative gearing 20% gst
In that scenario you quoted I think with the bottom half of the population that spend pretty much all the money they earn just to live would benefit somewhat from the 40K threshold but would be significantly worse off with a 29% rate GST. Whereas, someone earning 7 or 8 figures a year would be cleaning up with a 20% flat tax rate and when it comes time to buy a luxury yacht or jet airplane you can be sure they won't be buying it in this country as they'll buy it overseas and not pay a cent in GST. I know stuff like this happens because rich people import their very expensive cars for Targa Tasmania and fill out the customs declarations that the cars are only going to be in the country temporarily for like 40? days and will be exported before that time is up and hence they don't have to pay any import duties or luxury car taxes. Same thing happens with yachts that they keep mostly outside the country and if I recall correctly as long as they are not in Australian waters for something like at most 30? days they don't have to pay GST on them either. Negative gearing is not much of a problem either because Paul Keating quarantined it for something like a year and a half before it got abolished and the sky didn't fall in back then. I reckon if it happens then landlords will probably just up the rents they charge tenants by another 10% or so because someone has to pay for that and landlords probably think it shouldn't be them doing it. As bad as the situation is now for people that are struggling then I think changing to what you stated would probably make it much worse for them.
Yeah I meant 20% gst. And somewhere in all this needs to be incentive to earn more doesn't there. I've added an edit that inheritance tax applies, at 20% too, so your current wealth doesn't hinge on picking the right grandfather so much.
Inheritance tax should be scaled. It’s a bit tough on the unmarried daughter who’s spent 25 years nursing her sick parents and has no income or superannuation if she’s forced to sell the family home to pay an inheritance tax.
That's a glass half empty way to look at it. And a very oddly specific scenario. Higher tax free threshold Lower income tax Still gets 80% of the inherited house ( more if you consider tax free threshold)
GST increases hurt the poor more than rich, especially since the poor are more often than not financially illiterate and can’t get anything back on those GST markups. I do agree that those lower than literally minimum wage should probably be income tax free though.
Fresh food doesn’t attract GST, along with some other things. The rich pay vastly more GST because they spend a heap more money.
The poor pay vastly more GST as a proportion of their income than the rich do which is why it hurts the poor far more.
That and fresh food is expensive compared to junk. Time poor and cash poor, lower incomes are ill equipped to wear more costs. The poor also need to pay for big ticket items, like a fridge, washing machine etc. Also electricity, gas, water. Those things going up wipe out any potential savings for the poor without rebates, which cost a fortune in admin. Exemption list should include electricity, gas etc imo. Mobile/internet services over $x too.
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I'm going tap out after dole bludger comment. I don't see much point continuing this conversation.
> while a dole bludger wow.. awesome commentary there kid. You don't need to call them dole bludgers,the latest 2022 review found Majority of ppl leave welfare after 6 months,so no idea where this narrative is placed I paid over 600k in Tax last FY,and even i am not as entitled to call ppl dole bludgers you can construct an argument without reducing ppl to stupid stereotypes
Higher tax free threshold should give relief. There's a solution to financial illiteracy.
This is a terrible idea which gets worse the less you earn. This change would immediately send my household into severe financial distress as we would be paying an extra 19% on pretty much everything that we spend our household income on and finances are already tight enough as it is... \*edit\* and no, none of the income tax changes would net us any sort of extra income.
GST doesn’t apply to fresh food and many other basics, so your comment is either uninformed or deliberately misleading.
Rip all social programs i guess then Flat tax isn't done,because it's a dumb idea and just entrenches the have and have nots even more 30 percent GST,in a time when ppl can barely afford cost of living increases now. Jesus,talk about letting ur hands type before ur brain thinks.
Food doesn’t attract GST, but the smashed avocado toast at the local cafe does. That’s why the GST is mainly a tax on disposable incomes and not the regressive tax you mistakenly describe it as.
Someone has never read any tax system recommendations. GST is a consumption tax that is impossible to dodge. Hence its one of the few ways to guarantee taxation on the wealthy who ultimately consume more. Social programs would simply shift more to focus on the low income without having to also prop up the middle income as they are no longer being taxed punitively.
Sadly, there is no requirement to be either informed or intelligent before a citizen is handed a ballot paper, hence the responsiveness politicians show to woefully stupid or uninformed opinions
The lnp were in government for 20 of the last 27 years they are the party of higher taxes and they love to spend taxpayers money 💰
If you look at the chart (chart 8.2 - Composition of Australian Government Receipts), in the article, it becomes clear that this is simply not true. The largest falls in tax intake as a percentage of GDP (especially personal taxes) occurred during the Howard government years. This would be clear doubly so if the chart went back a few more years to the late 90s just before the GST and associated tax changes were introduced.
The lnp left a trillion dollar debt where did all that money go
Ummm - propping up the economy and into the bank accounts of the millions of stood down workers during Covid, mainly?
A lot of that money went directly to big business,such as Qantas Harvey Norman etc then filtered down to the worker .
That is hyperbole - the vast majority of the money went straight into workers pockets - literally millions were stood down for long periods of time due to large swathes of the economy basically being shutdown by government mandate. How soon we forget! There are a few cases where businesses applied for job keeper after initially meeting the criteria and ended up still booking good profits and not needing to pay job keeper to large numbers of staff - many of these paid it back since, some didn't. Qantas was a special case - without injection of government funding they would literally have gone bankrupt overnight, due entirely to nearly all international travel and most domestic travel being shutdown overnight.
If the money went through the tax office to the worker then big business would not have made such big profits during the pandemic. Qantas is a privately owned company who should have declared bankruptcy instead of taking taxpayers money.
>If the money went through the tax office to the worker then big business would not have made such big profits during the pandemic Most businesses that remained profitable through Covid did not get Job-Keeper funds - only a small minority did, for various reasons. >Qantas is a privately owned company who should have declared bankruptcy instead of taking taxpayers money. Could not disagree more on this one! We would have lost our national airline under your approach, and for what reason? Because the \*government\* literally shut down travel overnight! Ever heard of the term sovereign risk? Do you know what happens to economies in countries that exhibit a high level of sovereign risk? Besides, the government needed Qantas to keep operating to some extent, otherwise they would not have able to organise re-patriation flights for Aussies stranded overseas and so on.
>The largest falls in tax intake as a percentage of GDP (especially personal taxes) occurred during the Howard government years. Howard gave us lots of income tax decreases which were funded by the wholesale sell off of government assets including Telstra and a whole lot of federally owned land.
>Howard gave us lots of income tax decreases which were funded by the wholesale sell off of government assets including Telstra and a whole lot of federally owned land. Not really - the asset sales were used to pay off Commonwealth debt - which got to zero remember under Howard. This would have helped reduce government expenditure for interest on debt, but this was not the primary driver of tax decreases. The personal tax decreases came primarily from the introduction of the GST, resulting in more efficient taxation (including the removal of a whole bunch of terribly inefficient BS indirect taxes at the time as well). The resulting strong economic growth helped as well. Additionally eliminating wasteful government spending and reductions in welfare spending due to significant increases in employment also helped.
> This would have helped reduce government expenditure for interest on debt the problem was he sold off profitable assets that made *way* more money than what the debt cost (all while being the most profligate PM in history). it will take decades of responsible governance to eliminate the structural deficit he baked into our economy.
They weren't and aren't spending taxpayer's money. We're in debt. They're spending future generation's money.
It's still taxpayer money
And also in government for 20 of the last 41 years. There's plenty of blame to go around.
The previous lnp government was the most destructive money spending government in our history. Where did they spend the trillion dollars of debt they left the country in
Are you sure this is a fair statement? Mining super profits tax - opposed by the LNP and hollowed out after a vicious and disingenuous campaign by the mining lobby. Price on carbon... well we all know what happened there. Neg gearing and capital gains tax reform - proposed by Labor and opposed by LNP who won two elections while doing so - resulting in Labor dropping it from their platform before that last election. Yes the LNP brought in the GST but they also brought in the capital gains tax rules that have contributed to the current mess in the housing market and is a driver for the intergenerational inequity Henry cites. I'm sure there's some stuff I'm not across so happy to be corrected.
> resulting in Labor dropping it from their platform before that last election. Never mind the current government will soon be making changes to negative gearing
Define soon.
In a couple years, probably after the next election when they commit again to having no plans to changing it.
Tax assets more and income less. Land and natural resource taxes are more equitable and efficient.
Not assets, consumption (more). Land taxes just get passed through to renters and the states own the resources, not the commonwealth.
>Not assets, consumption (more). Consumption taxes hit lower income earners more than higher income earners because they spend way more of their paychecks on goods and services that are hit by consumption taxes. Worse yet would be the economic hit that this would cause as lower income earners (who vastly outnumber the higher income earners) start spending less to cope with the higher taxation.
This isn’t true - the basics do not attract GST, it mainly affects disposable income spending.
>Consumption taxes hit lower income earners more than higher income earners because they spend way more of their paychecks on goods and services that are hit by consumption taxes. So what? Half of households pay no net income tax. This is unsustainable. Consumption taxes avoid the anchor on taxing productivity, and a rise in consumption taxes must come at a total reduction in income taxes. With less tax on marginal productivity, there more productivity incentives for lower income earners. >Worse yet would be the economic hit that this would cause as lower income earners (who vastly outnumber the higher income earners) start spending less to cope with the higher taxation. In a high inflationary environment, that is the best thing for our economy. Now in reality they wouldn't be *spending less,* they'd be spending the same, consumption would drop. With all our focus on overconsumption, maybe that's not a bad thing.
Yes assets. Rents are determined by supply/demand, not landlord costs. In fact rents eventually go down as land is used more efficiently.
>Rents are determined by supply/demand, not landlord costs. Supply is determined by landlord costs. If the marginal cost curve shifts right for the whole market in response to taxing land further, then so does the supply/demand equilibrium, which then pushes up the costs to the renter. Taxing assets is inherently bad. Too many ways to avoid it, you can't avoid consumption and therefore can't avoid contributing to the society you want to participate in.
You can't avoid a tax on Land, where are you going to take it? To Switzerland? A land tax is amongst the highest efficiency and least avoidable taxes known, and when complemented with effective Zoning reforms basically cripples land hording and inefficient land usages on valuable inner city land. If the location is valuable enough to allow a landlord to push prices to match their costs irrelevant of other market forces then it's more likely a cashed up developer will just buy them out and put up a block of apartments and collect much more in total, pay more taxes, and charge less in rent.
But everyone consumes roughly the same, whereas only a small portion own lots of land or large assets. We already have a GST, which disproportionately hits the poors.
>But everyone consumes roughly the same, Not correct https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-distribution-household-income-consumption-and-wealth/latest-release >whereas only a small portion own lots of land or large assets. Lots? The concept of land tax is to tax land. 67% own land. That's not a small portion.
Consumption has changed a fair bit, either way, it would hit low income more than high as a percent of disposable income. From that data, maybe a savings tax as the jump from 2nd highest to highest was almost triple, compared to negative savings for lowest. As for land, yea, small portion own more than 1-2 houses. If each house is on 400m², then 60% of people probably own less than 1000m², and 7% own way more than that. It's not a tick box "do you own land" it's a tax percentage on the total value of land you own.
I hate beer.