Quick comments & quizzes

Quick comment: which tax challenge should we tackle as a priority?

23 April 2015

Which of the challenges for Australia’s tax system should we tackle as a priority – and how?

Your comment may be moderated in accordance with our moderation policy.

Comments closed 5pm Friday 24 April 2015 AEST.


PRINT Twitter Facebook  Like

30 thoughts on “Quick comment: which tax challenge should we tackle as a priority?”

  1. Nick Saverimuttu says:

    Change the tax mix.
    This is tax “reform” not tax “change”. Reduce taxes that distort investment and employment and increase taxes that minimise tax planning, reduce complexity and cost of compliance and collection. Deal with equity issues through tax offsets and transfer payments. Tax offsets are better than tax deductions to provide equity.
    Seek the assistance of professional bodies and tax experts to actively clarify issues to the general public through the media.

     3 Like
  2. John Kelmar says:

    We need a simple tax system, and the first step is to eliminate all the taxes that are currently being imposed on us, then to set a rate of 10% on all money a person spends. Hong Kong also has a very low tax rate, and the people don’t spend time trying to avoid taxes – they spend their time producing income.

    This will give Australians more money to spend, creating a greater demand for goods and services, which will increase employment opportunities, giving people more money to spend etc etc etc.

    Company Taxes should be zero for 100% owned Australian companies, and any company operating in Australia should pay a sliding scale of taxes on their cash flow based on the percentage of foreign ownership.

    All Public Companies should operate with Director’s guarantee that any debt would be repaid by the Directors.

    Politicians and Public Servants need to take responsibility for their excessive spending, and when their budget has been reached there should be no more money allocated to that entity. Yearly budget increases for Government should not be higher than the previous 12 month’s CPI, and under the current circumstances, salaries and benefits for all public sector staff needs to be reduced by the amount of the deficit.

     8 Like
  3. Ashley says:

    Equity is the greatest challenge .

    Our federal policy makers need to ensure our tax system is fair, not only to this generation, but also to future generations of Australians (i.e. striving for zero net debt). Since our political system is flat (i.e. one person = one vote), our tax system should also be flat (i.e.there should be a fixed income and company tax rate for all individuals, rather than a proportional tax rate based on income which is a disincentive to work harder). States should receive their fair share of revenue collected by the Commonwealth, relative to their population (i.e. all States/Territories should receive 100% of the GST generated in their State/Territory). Finally, our tax system should ensure that those who use and benefit from public services and infrastructure are the ones that pay for them (i.e. user-pays), while also providing a fair safety-net (e.g. family assistance for low-income earning parents of young children, healthcare concessions for pensioners) for those who genuinely cannot pay for them.

    Good luck!

     Like
  4. Robert Oser says:

    You are “putting the cart before the horse”. Priorities should be ordered not before the White Paper is published.

    You should identify, internally, “do-able” projects which can be legislated within a reasonable time frame and at minimal transitional costs to the taxpayers and the ATO. Best to get something done rather than getting mired in aspirational politics.

     Like
  5. Ashley says:

    Spreading the burden of taxation evenly across Land, Labour, Capital and Consumption.

     5 Like
  6. Brian says:

    From a politically acceptable view, start with the loss to Australian revenue from profit shifting by international companies. In the absence of independently supportable transfer prices, assess Australian Corporation Tax on global profits in proportion that the Australian sourced revenue is to global revenue.

     12 Like
  7. Tim says:

    Replace all taxes, business, personal, GST etc. , with a tax on economic rents. It is economically and fiscally possible. I know it sounds outrageous, but it can and should be done. And I hope that it will eventually will be.

    Why? Because all those other taxes, unlike taxes on economic rents, carry massive “hidden costs”, which only economists talk about and have fancy names for, incidence, excess burden, tax wedges, etc. But the bottom line is that these hidden costs are not minor, and measurably reduce growth and increase unemployment by a measure of hundreds of thousands. Our fiscal and economic problems, aside from excess government expenditure, in the end come down to our economically inefficient tax system.

    As Ross Gittens wrote, there are two sorts of taxes, taxes on economic rents, and the others. And yes, a “fair” tax is a tax on economic rents. You pay what you measurably can afford to pay.

    And oh yes, land tax is a tax on economic rents. So is the PRRT.

     Like
  8. Greg says:

    Stamp Duty is an archaic tax that reduces sustainable business. While this is a State tax it should be abolished and the short fall be made up in the collection of GST. This will increase the money flow( go around) in each State and give the State economy a welcome boost.
    This should be followed regulating Local Bodies ( Councils) so each Council has to abide with uniform standards and will mean rates will be used wisely to the benefit of all residents. Example I live in a small NSW town however I pay rates the equivalent of Melbourne. And rates are set by what you name is or who you know.

     2 Like
  9. Russell MOFFET says:

    SUPERANNUATION CONCESSIONS are EXPENDITURE

    SUPERANNUATION CONCESSIONS are EXPENDITURE because the taxation due on Income becomes expended by increasing the money set aside for the taxpayers Superannuation.
    Therefore, the Government’s mantra to reduce EXPENDITURE is achievable through a drastic revision of this Howard-Costello extravagant wealthy class welfare sop. It is to be noted low paid employees, particularly women, disabled and disadvantaged don’t earn a taxable income high enough to receive these Concessions nee Expenditure even if they had income left over from the family budget to put money into their Superannuation Fund.
    It’s time to CUT EXPENDITURE on giving tax due by the wealthy back to them by increasing their Super Funds.

    Russell Moffet

     Like
  10. Albert Anderson JP says:

    The whole tax system should be replaced.
    It is well past it’s ‘use by’ date, is far too complex and is not fair.
    It does not and can not generate sufficient funding in order to meet government spending.
    It does not meet the needs of the 21st Century digital economy.
    It’s capture base is continually diminishing.
    It can be & is ‘managed’ and manipulated by those with the resources to do so.
    It is subject to political & self interest group influence.
    Should I go on ???

    Why should we waste money & resources trying to fix something that is obviously un-fixable and in any case is not ‘fit for purpose’ ? Tax review after tax review has proven this.

    What do we replace it with ? Simple…
    A tax system that is not encumbered by the above.
    A system that does not rely on income tax, company tax, GST and the like, as does the current system.

    A tax system that is based on the broadest tax base possible and aligns perfectly with 21st Century ‘e’ everything,
    The capture point is Financial Institute monetary transactions.
    Everyone and every entity is connected to a bank account somehow. No-one or nothing escapes, unlike current tax base capture points.
    It is EFT based and therefore provides a 24/7 revenue stream and the technology for implementation is already with us.

    Australia’s Financial Transaction system is huge. A suggested 1%,,, yes 1% impost on every transaction has been modeled to provide approx. 3 times current tax revenues.
    It replaces all current taxation regimes.
    It’s benefits are too many to list on this forum.

    So why hasn’t it been considered before this ?
    You would have to ask current and past governments, Treasury tax strategists, economists, taxation academics, other tax policists and external governmental influences for an answer to that.

    It is nothing new and has been put to previous tax reviews with no consideration. A similar system has been used successfully overseas in recent years.

    We have been asked by Treasurer to Re:think Australia’s current and future taxation dilemma.
    We simply cannot keep doing the same thing over & over again and expect a different outcome.
    We HAVE to do something DIFFERENT in order to have a chance of a better outcome.

    I am going to suggest that Re:thinking the current system is pointless as we already know that it is well beyond repair.

    Just THINK about the possibilities of using the currently un-tapped Financial Institute transaction system as the capture point for FUTURE taxation revenue.

     2 Like
  11. Chris says:

    Change negative gearing to new properties only and / or in combination with SMART macro prudential rules (i.e. neutral gearing or other rules such as 5% yield, meaning a 40% deposit on existing property only with a current yield of 3% in Sydney) to create a wedge between new and existing property.

     3 Like
  12. Brian H says:

    first stop paying franking credits back to people who do not pay tax

    second limit deductions on any investments after three years to the income bring produced
    losses can be accumulated to offset profits when they are made at a later date

    third tax super funds in pension phase at 15% when income in all funds exceeds $75000

     3 Like
  13. Vic says:

    My priority would be:
    1. Income Tax – I say that we should revert to the pre-1942 situation where there was State rate and Federal rate for income tax, whose tax code was based on one (Commonwealth) income tax law. Alternatively, we should use the current income tax code and allow the ATO to remain as the administrator and collector, but allow the states and territories to keep the income tax and FBT revenue collected from or behalf of resident individuals and the Commonwealth keeps the revenue from corporates, trusts and superannuation funds.
    2. GST – What is collected in a state and territory should be returned to its place of collection. (Most of the large, national retailers already report their GST Returns on a state-territory basis and those who do not, could readily and cheaply modify their accounting systems.)
    3. Commonwealth Grants Commission (CGC) – Abolish the CGC which is past its “used-by-date”. The CGC was established in a bygone era when some states (viz WA) and territories (ie NT and ACT) were growing up in developing their infrastructure and self-administration. Today, the CGC has difficulty in contemporaneously calculating the divisions of the GST collected to states and territories (as witness in the current controversy surrounding complaint from WA). The CGC currently advises the Commonwealth on the basis on some-kind of Soviet era basis that certain parasite states (viz Tasmania and South Australia) should be subsidised (ie financially rewarded) for destroying their productive and job sustaining industries or not allowing certain industrial and job creativity to be undertaken activities based on some kind of ideology/thinking, while allowing their public sector workers to be CGC and has to be unnecessarily employed. Once the CGC financial allocation process is abolished, states and territories will then be subject to market forces and as hence, capital and labour (especially the general population) can be better relocate to where real job opportunities, better living conditions, etc exist. Those who choose to remain can enjoy peacefully, the decaying surrounds and the serene scene.
    4. Division 815 – Cross-border transfer pricing. The ATO has been tardy for nearly two decades) in auditing obvious miscreants corporates who practice tax minimisation through transfer pricing, thin capitalisation, multi-entry-(foreign) corporates, etc income tax provisions. The ATO has known for decades the income tax benefits extant in Singapore to foreign companies resident there but operating in Australia; but it has not modernised its international tax agreement with Singapore or the income tax law to overcome the obvious tax minimisation (ie avoidance) practice.
    5. Medicare and private health insurance – Back in 1983, I was paying about $400 pa for private health insurance for my young family. Medicare was introduced and my Medicare levy was around $150 pa. I was at the time earning the average national wage. So I stopped buying private health insurance and paid-as-I-went my medical expenses while receiving an income tax deduction (or in today’s vocabulary, “tax offset”) for expenses incurred. Today, I have private health insurance and its associated subsidy from the Commonwealth and a medical expenses incurred deduction. (The deduction is being curtailed in the next few years; while subsidy is not assured.) The governments recognise that the population is aging and thus they will seek greater medical and hospital support from their governments. However, this social obligation by governments is presently not being widely debated. Therefore, I feel that it should be part of the current tax reform discussion.

     Like
  14. Andrew says:

    1) Broaden and increase GST to 15% – no exceptions (including online purchases)
    2) Simplify tax – eliminate deductions, negative gearing, capital gains concessions, tax on interest on deposit accounts, etc
    3) Eliminate tax avoidance by multi nationals

     6 Like
  15. MargM says:

    Any income earned in Australia should be taxed here Perhaps consider lowering business tax rate to dissuade profit shifting.

    All church property and income should be taxed

    Negative gearing phased out

    Increase the GST to 15%

    All persons over 65 get a health care card

    A thorough investigation into all Gov subsidies

    More humane treatment of asylum seekers . As it , its costing a small fortune

     1 Like
  16. A Taxpayer says:

    1) Remove tax free status of all religions and sudo-charities
    2) fix negative gearing so it can only be applied to the income derived from the asset purchased with the loan, or better yet just remove negative gearing at all.
    3) Allow income sharing for tax purposes, to stop people trying to do the same themselves
    4) Increase GST % and coverage
    5) Give a health card to everyone over 65 and remove the trigger for the health card to be receipt of pension.
    6) Remove all tax breaks for family trusts and close the family trust loop holes
    7) remove all state based stamp duties
    8) Remove payroll tax

     4 Like
  17. Doug Riley says:

    Abolish state stamp duties. Widen GST to include all items and increase the rate to 15% with generous increases to pensioners etc. Make unions, churches pay taxes. Examine the need for not for profit oranisations. Ensure that all negatively geared investments have the objective of being profitable within 5 years and reduce the benefits received by the investor if this is not achieved. Reduce the threshold for qualification for seniors health card.

     1 Like
  18. Daniel says:

    The insane spending including the bloated and massively inefficient public service.

     2 Like
  19. Leanne Sampson-Bowden says:

    Tax the wealthy and corporations more plain and simple. And leave all kind of welfare alone.

     1 Like
  20. Daniel says:

    Bracket creep. Land tax

     3 Like
  21. Fox Mouler says:

    which tax challenge should we tackle as a priority?

    Affordable housing.

    1. Remove negative gearing as it results in higher rents and a constricted supply.
    Landlords use the financial benefits of unrealsied capital gains and lower tax brackets derived from losses to leave properties empty while they seek overpriced rents . This distorts the market as agents use the current advertised price of empty advertised stock as their pricing guide.

    Every time a rental is advertised, the asking price is 30% higher than the market as the landlord goes fishing for a high paying tenant. This results in properties being left empty while the landlord enjoys the financial break of a lower tax bracket or waiting to cash in of un-realised capital gains.

    The concept of negative gearing was supposed to provide more availability of housing to renters at a cheaper price. This concept was outlined by the Treasurer on ABC’s Q&A a few weeks back when he stated his reluctance to abolish the scheme in support of providing more availability of housing to the market.

    But in reality this is not the case as described above and as outlined by many investors. (refer the Australian Financial Review April 16-Story about landlord Anna Rorke).
    Ms Rourke stated she was prepared to accept lower yield because “….of the $700,000 odd [unrealised] capital gain…”

    This current tax break also results in a distortion in the price of housing. NG and the 50% concession of CGT results in speculation in the housing market that floods the market with speculative investors-espicially since we have low interest rates. This means would be owner-occupiers are forced into a constricted rental system that (as noted above) is hampered by the exact same policies!

    Since banks have the bulk of their portfolio’s in leveraged speculative housing, the Treasurer now wants to secure the banks by applying a tax to secure those that have contributed their savings to the banks. This again is wrong policy! Those that deposit money in the banks need protection AGAINST the risky lending practices of banks and speculative housing investment. The tax needs to be paid by the landlord that has the loan since that is the source of the risk- not the depositor.

    So to fix this mess and restore a balance to affordable housing.

    1. Abolish negative gearing and all the problems go away.

    If this is not abolished, then

    1. Restrict NG to new built houses only and phase out the existing system over 5 years.
    2. Limit NG to the time that the house is rented. Cancel NG for when the house remains vacant.
    3. Re-coup 20% of the the un-realised capital gains on houses each year rather than when it sold off. This will provide a needed boost to the budget and government revenues.
    4. Impose stricter lending standards on property loans. Mandatory 30% cash to buy a house (cannot be equity in another property) This will make the banks more sustainable and remove the requirement to have depositors pay (Deposits) taxes to protect the banks from housing market shocks.
    5. Remove the 50% CGT as this becomes redundant in point 3 above.
    6. Get the regulator (FIRB) to start prosecuting illegal overseas investors and their supporting agents from buying Australian Property. They have never paid taxes here, nor contributed financially to our country. So why do we allow them to own a part of what we tax payers have funded?

    Socially Responsible Tax Reform.

     4 Like
  22. Wade MacRae says:

    Tax expenditures (or in general terms ‘tax breaks’). According to the IMF, Australia has the highest value of tax expenditures in the world. The 25 largest expenditures equal $122 billion in lost revenue. The two largest are capital gains tax discounts and superannuation concessions. The financial benefits from both of these tax breaks flow almost exclusively to high income earners. Closing these havens would allow for budget repair and the lowering of highly inefficient taxes such as income tax.

     Like
  23. Richard says:

    Neither…. CUT EXPENSES TO BALANCE BUDGET

     10 Like
  24. GEOFFREY HODGKINSON says:

    Simplification of Income tax and GST – by the removal of the myriad of deductions, exemptions, rebates and offsets; Increase reliance on consumption and property tax provided they are broad based with no exemptions.

     7 Like
  25. Simon says:

    If Australia is serious about encouraging people to live and work in rural/regional areas it must address the shambles that is our remote area concessions.

    There are some great salary packaging opportunities that are really effective at encouraging employees to move to/remain in remote and regional areas, however at the moment the concessions are all over the place. If your employer provides accommodation you can package all your rent tax free, if you source your own rental accommodation you can package half your rent tax free, and if you own your own house you can package your interest, but it’s subject to an effective tax rate of around 30%.

    Where’s the consistency in this? Why are we punishing people for deciding to buy a home in remote areas? Salary packaging is a powerful tool that can deliver really good policy results in this area, but the effectiveness of it all is being undermined by overly complex and inconsistent rules.

     4 Like
  26. Kahem Arhov says:

    We should tackle private health insurance rebate, superannuation, deposits and negative gearing for existing users.

     2 Like
  27. Louise Crawford says:

    I think you could wind back negative gearing. So that only one house can be negative geared. And close loopholes for multinationals and trust funds.

     4 Like
  28. Leanne Carroll says:

    its about time religious privilege was left behind. Tax the churches who rip millions off people yet pay no tax under religious exemption. It’s a total disgrace and billions would be raised if we end the practice of religious concessions.

     7 Like
  29. Vince says:

    1 superannuation tax concessions
    2 negative gearing and associated capital gains
    3 companies shifting profits overseas to low tax areas such as Singapore

     7 Like
  30. Jason says:

    Need to expand the GST base and raise the rate to 15%.

     13 Like

Comments are closed.