Three reasons why you should ‘chill out' over Labor's super tax
The course of action we pursued was simple. We drew together 100 representatives from all sections of the community and, in a tax summit, reached agreement on this significant tax reform, which a small steering group pursued through to the next federal election.
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The expert behind a proposal to hike the GST to 15 per cent has defended the controversial plan, saying Australia's tax system is 'broken' and needs 'bold change'. Ahead of Labor's Economic Reform Roundtable next week, UNSW economist Professor Richard Holden and WA Teal MP Kate Chaney have floated a radical plan to overhaul Australia's tax system — by raising the rate of the goods and services tax (GST) for the first time since it was introduced at the turn of the century. Under the proposal — which has already been ruled out by Prime Minister Anthony Albanese — the GST would by raised from 10 per cent to 15 per cent and broadened to include fresh food, health, childcare and education. To soften the blow, all taxpayers would receive a $3300 annual rebate, effectively removing the GST on the first $22,000 of someone's spending. 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'What this would do after the compensation is leave you with enough money to cut the top marginal tax rate from 45 per cent to 40 per cent, [and] the second marginal tax rate from 37 per cent to 32.5 per cent,' he said. Ms Chaney denied the $3300 rebate was a 'bribe'. 'No, it's simply returning the GST on the first $22,000,' she told the program. 'What we're saying is we need more tax, paid by people who can afford to spend more. We have one of the lowest GST in OECD countries, about half the average, so by bringing the GST more in line with other countries we will actually be able to have personal income tax cuts and fix the budget.' She conceded a 5 per cent increase to the GST would 'probably' cause a 'one-off shift' in inflation. While Mr Albanese ruled out the proposal, Ms Chaney said she hoped it 'starts a conversation' ahead of the next election. 'It's politically really scary for people to talk about tax and I understand that, but if someone doesn't start it then we're never going to make any progress at all,' she said. Host Ally Langdon pressed Ms Chaney on why more could not be done to cut wasteful government spending instead of raising taxes. 'I would like it if the budget actually matched up each year,' Ms Chaney said. 'The reality is we've got an ageing population which means more health costs, more aged care costs, we have an NDIS, we want to support people with disabilities. People do expect a lot from government services.' Speaking to ABC Radio Melbourne on Thursday, Labor MP Andrew Leigh said while he liked Prof Holden, the government had no plans to touch the GST. 'The Prime Minister and the Treasurer have a longstanding view on the on the GST,' he said. 'The government isn't doing any modelling at the moment and doesn't have any plans to change the GST.' Dr Leigh argued there were 'more efficient taxes than the GST'. 'It hasn't been at the centre of the conversation around productivity,' he said. 'There was certainly more discussion around corporate tax, and that's been a matter that has occupied much more discussion from the Productivity Commission for example, which has thought more about investment allowances and company taxes than it has about expenditure taxes.' Asked whether he supported Ms Chaney's proposal, Mr Albanese on Thursday replied, 'Governments make government policy … the only tax policy that we're implementing, is the one that we took to the election.' That includes Labor's legislated $5-a-week tax cuts which would grow to $10-a-week in the 2027-28 financial year, and the push to double taxes on superannuation accounts over $3 million to 30 per cent. Mr Albanese noted there would be a 'range of ideas floated' ahead of the Economic Reform Roundtable set to take place from August 19 to 21, adding that people are 'entitled to put forward their views'. Despite this, the PM has rejected increases to consumption taxes, like GST, stating they were 'regressive in nature'. On Sunday, the Australian Council of Trade Unions (ACTU) unveiled its own proposal, calling for cuts to negative gearing and capital gains tax concessions for property investors to be limited to just one property, following a five-year grandfathering period. Asked about the ACTU plan on Wednesday, Treasurer Jim Chalmers noted the government's longstanding promise to not adjust negative gearing and capital gains tax concessions, but said he didn't want to 'get in the habit of knocking off ideas before we get in the room'. 'The guidelines I've put around people's contribution is to make sure that there's specific ideas, that they're affordable, that they're in the national interest and people try and engage with each other and not just the government on them,' he said. 'Some people have embraced that challenge, others haven't. I've tried not to kind of engage in a daily running commentary on every idea that's pitched up.' Meanwhile, the Australian Council of Social Services (ACOSS), in its submission to the roundtable, has called for reform to the tax system to raise more revenue, reduce inequality and drive action to address climate change. 'For too long now, people with plenty have been showered with tax breaks that pull investment away from productive purposes and rob essential public services of the revenue they need,' Dr Goldie said. The council is advocating for changes to employment opportunities and streamlining income support. 'The extra revenue we need to fund care and community services, schools, and an income support system that protects people from poverty must come from those with the most capacity to pay — not those doing it toughest,' ACOSS chief executive Cassandra Goldie said. 'We must better prepare and train people for jobs and finally lift income support to levels that don't trap people in poverty and destitution.' Opposition leader Sussan Ley on Thursday accused the government of using the roundtable to push tax hikes under the guise of productivity reform.
