The Write Direction: Thoughts on taxation reform

WITH little opposition coming to unsettle the present federal government, the Prime Minister might let the Treasurer off his tight leash in order to propose changes to the way taxation reform might be attempted.

The government understands that attacking the assets of wealthy and homeowning members of the retired community through a tax on super just won’t work, so they need to investigate far wider means for taxation reform.

For some time now, experts in taxation have preferred moving the dial from taxing income towards taxing expenditure.

There are some obvious advantages.

When income is achieved from illegal methods, those that benefit will at some stage want it to be spent, thus providing merit to taxing expenditure.

One obvious idea is to increase the GST rate and even double it by allowing other taxes to be eliminated such as stamp duty on real estate purchases.

The reason this will not happen is because GST is presently given to state governments and it’s the Federal Government which is racking up debt, so taxation income is needed by the Feds in order for them to pay its growing debt and budget deficits.

If indeed we need to change the present taxation collection method, the most difficult issue is deciding where, when and how that change could take place.

There is a possible solution as to the change-over date which may be suitable to voters.

People locked into today’s methods of designing their structure could be protected by a grandfather agreement that allows those structures to continue, and all new taxpayers could automatically be moved to the new system at the given date.

Treasurer Dr Jim Chalmers has the personality to sell these changes to the voting public, but everyone would need to accept that any changes to taxation collection methods can only mean more money for the Government and therefore less in voters’ pockets.

By John BLACKBOURN