Tax forum an opportunity for long overdue reform of Australia’s tax and transfer system

The Australian Council of Social Service today welcomed the Federal Government release of a discussion paper for the national tax forum to be held in October, and urged the forum to be the turning point for securing a simpler, fairer and more efficient tax and transfer system.

“ACOSS is pleased the Commonwealth is taking the next step towards reform in this complex but crucial area of policy. Our taxes aren’t high by OECD standards, however they are unfair and inefficient. We need to secure the revenue stream to meet the social and economic needs of the future especially with our ageing population,” CEO Dr Cassandra Goldie said.

“ACOSS has long argued for changes to make our tax and transfer system fairer, based on people’s capacity to pay. In particular, we have led the call for Government to reduce waste in our tax system through tax minimisation practices of those with the ability to pay.

“We have consistently called for the removal of shelters and loopholes from personal income tax so that income from different sources is taxed consistently and there is less scope for those on higher incomes to avoid paying tax at their marginal tax rate. The revenue raised could be used to lower tax rates and/or improve services.

“We want a fairer, simpler and more sustainable system of support for retirement incomes, including reform of tax breaks for superannuation so that low and middle income earners obtain the same benefits per dollar saved as high income earners receive.

“ACOSS would also like to see a reduction in biases in the tax system that favour speculative investment in housing and other assets and inflate home prices, which leads to cost of living pressures.

“We are pleased to see employment participation and social security included in the agenda and look forward to being part of this all important process. For many years ACOSS has been calling for a fairer social security system for people of working age that encourages employment, in which levels of payment are based on living costs and need rather than judgements about whether people are unemployed or ‘unable to work’. Our top priority must be to implement the Henry Review’s proposal to reduce the gap between pensions and unemployment payments, now $128 per week and growing every year.

“This is one of the biggest disincentive for people living on the disability pension to seek employment – the fear of being transferred to the lower Newstart Allowance. Newstart for a single adult is just $34p day which is simply inadequate to cover people’s minimum ‘decent’ living costs. We will continue to insist that the Newstart, Youth, and Sole Parenting allowances are increased to a liveable level, as recommended by the Henry Review.

“In previous submissions to government we have called for changes to raise revenue efficiently, that is tax different activities in a more consistent way to remove economically harmful biases in the tax treatment of different investments and work disincentives.

“We are well aware that this will be a process and won’t happen overnight. The Commonwealth will need to bring the community with them and this inclusive tax forum should be an important stage in building consensus on real reform,” Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155

ACOSS Papers on tax reform:
See ACOSS Budget Priority Statement 2011-12
Out of the Maze: a better social security system for people of working age
Australia’s Future Tax System – ACOSS Evaluation