Government support must be targeted to ensure intended recipients benefit.. Frequently distortionary, regressive and expensive concessions for investment in equipment that would be bought anyway, dividends, capital gains, superannuation and property must be reconsidered.
Simplification of Australia’s complex tax code of tens of thousands of pages is essential. It enables legal structuring of affairs to minimise tax liabilities. A simpler principle rather than detailed rule-based system and allowing retrospective penalties, where the legislative policy or intent is ignored, would reduce tax planning opportunities.The GST, ultimately introduced by stealth, took decades.
Unwilling to attempt serious tax reform, governments rely instead on bracket creep – increased tax revenue from rising nominal incomes due to inflation which put taxpayers into higher tax categories. This has pushed up thefrom 24% in 2016-17 to about 27% now. Inflation indexing thresholds would force governments to be transparent about tax revenues. Understandably, it faces bipartisan opposition.
A large tax advice industry of questionable productive value resists simplification as an existential threat. Voters are likely to reject proposals that adversely affect them financially. Without radical tax reform, Australia faces an insoluble public finance problem – demand for spending which cannot be met by taxes. The only other course of action is to wind back the country’s cherished welfare net.Satyajit Das is the author of
Here's some radical proposals: