Labor mulling family trusts and electric vehicle rebates in major tax reform shakeup for second term economic agenda
Family trusts and electric vehicle rebates are likely to be in the Labor's sights as it looks to raise revenue while delivering income tax cuts and boost the nation's budget.
The Albanese government has swept into its second term with a large majority and with it, the promise of tax reform.
Treasurer Jim Chalmers on Wednesday hammered in this pledge during an address to the National Press Club where he put forward Labor's case in the productivity-boosting agenda.
Sources told the Australian Financial Review Labor is likely to propose higher taxes on family trusts as Treasury ramps up scrutiny of the tax-friendly investment vehicles.
Many Australian families and businesses use the trusts to protect their assets and split income between beneficiaries to reap the benefits from the lower tax rates.
The individuals who are the beneficiaries of a trust pay their personal income tax rate on the distributions.
This means the tax paid on a trust can vary from zero per cent to 47 per cent.
Labor at the 2019 election proposed a minimum 30 per cent tax rate on trusts as part of its failed swath of tax reforms, including changes to franking credits, negative gearing and capital gains tax discounts.
The possibility the Albanese government is considering changes to family trusts comes as Mr Chalmers on Wednesday flagged a new road-user charge for electric vehicle drivers that would replace the fuel excise.
The typical household with a car running on petrol pay more than $1200 in fuel tax while EV drivers are exempt from the levy as they don't use traditional fuel sources.
'We will also continue to work with states and territories on the future of road-user charging,'' Mr Chalmers said.
'All of this represents a big agenda on the supply side of our economy. None of these reforms are simple.'
The AFR in March reported the estimated $55m cost of the EV rebate for the 2024-25 financial year had ballooned out to $564m per year in missed tax revenue.
Mr Chalmers was also questioned on possible changes to GST ahead of Labor's upcoming productivity roundtable - where Australia's economic agenda will come under the microscope.
'I suspect the states will have a view about the GST. It's not a view I've been attracted to historically, but I'm going to try not to get in the process of shooting ideas between now and the round table,' Mr Chalmers said.
AMP's chief economist Shane Oliver urged Labor to hike the GST and apply it across the board to minimise income tax.
'In an ideal world you would have less reliance on income tax and reduce the disincentive effects associated with it and have more reliance on GST,' Mr Oliver told SkyNews.com.au.
Labor is also embarking on making changes to large superannuation accounts, which includes taxing unrealised capital gains, and has met fierce opposition from business leaders and economists.
The changes come as Labor faces a decade of deficits and ballooning costs of the NDIS and defence.
Labor also faces reduced tax revenue from lower tobacco excise and falling fossil fuel exports as Australia continues on its renewables shift.
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