Review of the Tax and Transfer Systems

8 August 2008

ACOSS has welcomed the release of the Government’s background paper for the review of taxes and transfers.

“The tax and transfers review is an important opportunity for major reform. The Government has made a good start by providing sufficient time to review the system thoroughly, as well as a broad and open consultation process with the sharing of information on the options being considered by Government which are essential to ensure the best results. ACOSS looks forward to participating fully in the process,” ACOSS President Lin Hatfield Dodds said.

“The report confirms Australia’s status as a low taxing nation – the 8th lowest among the OECD countries. However, there are long standing inequities in the tax system,” Acting CEO Gregor Macfie said.

An example of inequities illustrated in the report is the much great tax benefit available to high income earners than to low and middle income earners for every dollar invested in superannuation.

The report also reveals the very low levels of income support paid to the poorest Australians. For example, an unemployed single adult on Newstart Allowance receives just $219 per week and the single pension rate is just $273, excluding supplements such as Rent Assistance. People struggle to live decently on these incomes at a time when the costs of basic essentials such as food, rent and utilities are rising sharply.

As the review proceeds, ACOSS will be looking for:

  • A thorough review of the adequacy of social security payments for low income people.
  • Simplification of the social security system and reduction in the worst ‘effective tax rates’, in order to encourage more jobless people to find work.
  • Attention to higher public revenue needs in the future as the population ages, especially for health and social support services.
  • ‘Base broadening’ reforms to make the tax system fairer and more efficient, especially by taxing different kinds of income in a more consistent way.
  • A fairer superannuation system that improves support for long term saving by low and middle income earners.
  • A more rational and consistent tax regime for charities.