So the Tax Forum is done and dusted. Was it simply a talk-fest? Or a useful exchange of ideas? We’ll have to wait and see.
In the meantime, if you missed anything, don’t despair: we’ve collected some of Australia’s best academic thinking on taxation reform for you here.
Frank Stilwell, Professor in the Department of Political Economy, University of Sydney suggests a Warren Buffett-style overhaul to tax the wealthy and other good ideas:
“Buffett has pointed out that he pays a smaller share of his total income in tax than his secretary does. This is largely because incomes from labour are taxed more highly than incomes from capital.
Taxes on capital gains and dividends tend to be lower than taxes on wages, and the wealthy get most of the income from capital. No wonder economic inequalities are increasing.”
Miranda Stewart, co-Director of Taxation Studies, Melbourne Law School at University of Melbourne, on the argument for eliminating stamp duties and introducing a broad-based land tax:
“Tax reform for housing is hard, because it affects so many of us and because it involves both the federal income tax and many state taxes.
That is also why it is important. A "package” approach is needed, in which the federal government will support state governments to reform their systems.
Reforms to improve the taxation of housing would fix some of the worst problems in our state tax systems, and would make our income tax fairer and more neutral in its treatment of different kinds of income and investment.
A tax reform that rebalances the system to tax housing assets more neutrally and fairly can make a significant contribution to improving housing fairness, efficiency and affordability.“
Peter Whiteford, Professor, Social Policy Research Centre at University of New South Wales, argues inequalities in the social security system must be urgently tackled:
"Almost 50 cents of every dollar spent by governments in Australia goes on social spending – either social security or health and community services. This week’s tax forum must reform the system, as the taxation and transfer systems are the two main ways governments reduce inequality and poverty.
The Henry Review and the Harmer Pension Review between them provided the most detailed analysis of Australia’s social security system looking not only at the interactions between the two systems, but also analysing specific social security policy issues in their own right.”
John Freebairn, Professor of Economics, University of Melbourne, gives the expert view on why the GST will inevitably be reformed, even if it’s not tackled this time:
“While changes to the GST are not an explicit item on the Tax Forum agenda, they should be and the issue will arise anyway.
A broad and comprehensive GST tax base along the lines of the New Zealand model would provide gains in efficiency and simplicity.
Recycling revenue gains from a broader base GST and an increase in the GST rate to replace more distorting state stamp duties and some income tax would provide further efficiency gains.
A larger revenue-earning GST would help reduce vertical fiscal imbalance and some of the inefficiencies of current commonwealth-state financial relations.”
John Langmore, School of Social and Political Sciences, University of Melbourne, on the reasons why Treasurer Wayne Swan should follow Europe’s lead in considering a financial transactions tax:
“It would be timely for the Australian Government to review its knee-jerk agreement with the US in opposing the proposal.
If Treasurer Wayne Swan would like to generate additional revenue in the least controversial way, he would do well to join Germany, France and the rest of the European Community – as well as many countries in the developing world – in supporting a global FTT.”
Ian Winter, executive director, Australian Housing and Urban Research Institute, on how the Tax Forum could be an opportunity for the brave to put forward reforms for our property industry:
“A series of tax settings – such as limiting negative gearing and replacing state-levied stamp duties with a broad-based land tax – were identified by the recent Henry Tax Review, but are considered politically difficult.
Yet new research by the Australian Housing and Urban Research Institute’s Professor Gavin Wood provides early evidence that the Henry Review’s recommendations would have a positive impact.
Limiting negative gearing provisions for residential landlords would likely see an increase in the supply of private rental accommodation from "equity investors”, such as superannuation funds.
Henry’s proposal to replace stamp duty with a broad-based land tax levied on an individual rather than aggregate basis could also see prices drop by up to 10%.“
John Passant, senior lecturer in tax law, Faculty of Law, Canberra University, on the quiet tax powerhouse that is the local government sector:
"Why is local government important? It is democratic, transparent and performs a vital delivery role for many basic services, from roads and road maintenance to water supply and sewerage, community facilities like swimming pools, public halls and libraries, aged care facilities, stormwater drainage, waste management, natural resource management and emergency and disaster response and relief.
It’s economic impact too is huge. The sector employs more than 185,000 people. It owns fixed assets and land worth more than $300 billion. It raises over $32 billion in revenue. That is 3% of Australia’s total tax take. It spends over $27 billion.”
Keith Kendall, Senior lecturer in tax law, School of law, La Trobe University, on why lifting the GST exemption of basic foods is a good idea:
“As everyone needs to eat, then at least basic food should be exempted so that food prices are lowered and lower income families are given a helping hand.
Exempting food in this way, though, is far from the best way of achieving the desired result of helping such people. One outcome is that the exemption may actually cost more than the benefits it produces.”
Eva Cox,research fellow at UTS, on whether there should be tax exemptions for high incomes women to subsidise nannies:
“Some very well-paid women want to use the Tax Forum to press the government to substantially subsidise the costs of nannies by allowing their costs to be tax deductible.
They claim this is essential to allow some high-income skilled women to return to their full time paid work.
But this suggested change to child-care subsidies raises some interesting questions about the purpose of this type of government funding, as well as possibly exposing children to lesser levels of care.
It may also encourage powerful women to exploit many less powerful ones.”
Richard Eccleston, Associate Professor, Political Science, University of Tasmania, on why we shouldn’t expect too much to come out of the Tax Forum - and why that’s not such a bad thing:
“Expectations for the upcoming Tax Forum – which I am attending – may be modest, and the prospects for near-term reform may be low, but it is important to recognise that building political support for contentious and complex tax packages takes years rather than months.
In this context, the Tax Forum should be regarded as an opportunity to build the political foundations for the next round of tax reform.
Fortunately, the forum is not starting from scratch. There is both a growing recognition among experts and awareness among the voting public that tax reform is required.”