Australian Council of Social Service

ACOSS calls for clear agenda on tax and transfer reform

October 6, 2011 - In the wake of two days of tax and transfer discussions, ACOSS is calling for the Federal Government to set out a clear agenda for reform of the tax and transfer in the national interest.

"We congratulate the Government for staging the National Tax Forum, which despite some cynicism, was extremely worthwhile. But the Commonwealth needs to outline a clear path for the next phase of tax reform in the areas of vital importance to the Australian community," said ACOSS CEO, Dr Cassandra Goldie.

"There was widespread agreement - from community to business, trade unions, researchers, environment groups, and others - on the need to secure our future revenue base, tackle income tax shelters, and make superannuation fairer.

"ACOSS was particularly heartened by the broad acknowledgement that income support allowances, notably Newstart Allowance, is simply not enough for people to live on and should be increased as recommended by the Henry Review.

"This was widely agreed on, not just by community groups but also unions, academics, and economists like Judith Sloan from National Seniors Australia. Researcher Peter Whiteford told the forum the Newstart benefit has shrunk so much relative to living costs that the cheapest capital city accommodation leaves a person with just $16.50 a day to live on.

"ACOSS does not support the Treasurer's view that every single expenditure, especially Newstart Allowance, has to be linked to savings. Government's prioritise spending in every budget and we think policies to ease the worst poverty should have a high priority.

" ACOSS believes that an increase in Newstart can be funded almost immediately by Government action to close business loopholes and shelters that we estimate cost at least $20 billion in forgone revenue every year. This compares to around $1 billion to fund an increase in Newstart by $50 a week - which would help lift scores of struggling people out of the worst forms of poverty.

"ACOSS rejects any talk of a supposed welfare payments blowout as completely overblown. Commonwealth figures show that the proportion of people of working age relying on income support has declined in the past decade, and as Professor Whiteford explained, Australia spends less in social security than the average of the rich nations in the OECD.

"We were disappointed the Treasurer did not make any reference to securing more affordable housing through the tax and transfer system, which was another area of wide consensus. We simply must tackle the biases in the tax system that favour speculative investment in housing and other assets, which inflate home prices and add to cost of living pressures.

"Whilst ACOSS welcomes the announcement by the Treasurer of the independent tax advisory board, we believe it is essential that both the board and the new business tax working group include representation from the community and unions as well as business.

"Tax reform isn't just about business interests. This was well demonstrated by the Tax Forum itself where the diverse interests represented helped to sharpen the debate. The government must ensure that diverse representation continues.

"The tax and transfer system is the engine room of the country. It must be used to guarantee the things we all want - namely, adequate income for all, including post working life, affordable housing, and a greater sense of fairness and equality for all Australians," Dr Goldie said.

Media contact: Fernando de Freitas - 0419 626 155

ACOSS Submission to the Tax Forum Paper: A fairer, more efficient tax and social security system 
Opinion piece by ACOSS CEO Dr Cassandra Goldie in the AFR titled: 'Tax system needs a dose of equality' 

National Tax Froum - 4-5 October 2011

The National Tax Forum, held on Tuesday 4 October and Wednesday 5 October at Parliament House in Canberra, brought together around 150 representatives of the community, business, unions and government, as well as academics and other tax experts, to discuss priorities and directions for further tax reform. It included six sessions: personal tax, transfer payments, business tax, state taxes, environmental and social taxes, and tax system governance.

Click here for more information on 'A Tax Plan for Our Future'
Statements of Reform Priorities & Submissions and Comments - See submissions >> 
Read ACOSS submission >> 

See Opinion piece by ACOSS CEO Dr Cassandra Goldie in the Australian Financal Review titled:
'Tax system needs a dose of equality'.

Tax Forum and the Community Sector
ACOSS has been deeply involved in public policy debate on tax and social security reform over many years, including through our participation (with ACTU, ACF and the Consumer's Federation) in the Community Tax Forum that assisted community organisations to develop policy ideas and positions to put to the Henry Review. ACOSS has developed comprehensive reform measures that would make Australia's tax and transfer system fairer and operate more consistently and efficiently for all Australians.

Community representatives
A total of 39 community sector representatives were named as participants in the Tax Forum. Spearheaded by ACOSS, these included representatives from ACOSS members: Anglicare, Australian Federation of Disability Organisations, Brotherhood of St Laurence, Catholic Social Services Australia, Community Housing Federation of Australia, Carers Australia, COTA Australia, Jobs Australia, Mission Australia, Mental Health Council of Australia, National Shelter, Salvation Army, National Seniors Australia, St Vincent de Paul, Uniting Care Australia, Uniting Care Wesley Adelaide, and others.
See full list >>

What ACOSS proposes tax and social security reform should achieve?
These are the four key things identified by ACOSS:
i. Revenue adequacy
• Should rise as a % of GDP as the population ages, to meet the growing cost of services
ii. Fairness
• Tax should be based on ability to pay and social security should be based on essential living costs
iii. Economic efficiency
• Both investment incomes and earnings should be taxed more consistently
iv. Poverty and participation
• Poverty should be reduced and employment participation increased at the same time

Problems to be resolved:
1. Will retirement incomes and services be adequate?
2. An unfair personal income tax system: different kinds of income are taxed inconsistently, leading to avoidance opportunities for some at the expense of others
3. Unaffordable housing and economically dangerous asset price booms
4. An outdated system of social security payments for people of working age that entrenches poverty and undermines employment participation

Tax and social security reform: the next steps
Initial statement for the National Tax Forum from Dr Cassandra Goldie and Peter Davidson, Australian Council of Social Service CLICK HERE >>

TaxWatch
TaxWatch based at UNSW and convened by Professor Disney hosts up to date information and resources about the Tax Forum and tax reform in general. Keep a check of this excellent resource for the sector as we move into the next important stage of tax reform. It includes comparative data, media reports on tax, short papers by experts and info on tax policy events.

Insight 4: Fair share - the tax edition
'Fair share - the tax edition' looks at why tax reform matters.
The latest issue of Insight is now available online >>

Articles include:
Why tax reform matters to the community sector
ACOSS CEO Cassandra Goldie - Here >>

How the personal income tax system allows wealthier Australians to ‘choose' to pay tax at a lower rate
ACOSS' Peter Davidson explores the inequity in our tax rates. Here >>

In conversation: Julian Disney
Julian Disney, national chair of the Community Tax Forum, on priorities for tax reform and the tax debate. Here >>

Sector in the sights
The community sector's facing significant tax reform itself, explains Myles McGregor-Lowndes. Here >>

Housing
We have got our policy wires crossed with housing and tax in Australia, writes Sarah Toohey, from Australians for Affordable Housing. Here >>

Superannuation
It's time, writes Peter Davidson from ACOSS, that we expose superannuation tax treatment to the same tests of fairness and efficiency that we apply to other forms of ‘welfare'. Here >>
 
ACOSS Publications
Personal Income Tax Reform - Henry Review
Out of the Maze: a better social security system for people of working age
Australia's Future Tax System - ACOSS Evaluation

Also see ACOSS Media Releases on the Tax Forum and Economics & Tax
ACOSS Papers on Economics & Tax and Employment & Income Support