Better tax system for Australia

“The next term of parliament should be seen by all parties as an opportunity to reignite the tax debate and come up with a plan to deliver a better tax system that lowers tax burdens, improves fairness and is able to meet the substantial fiscal challenges ahead,” Innes Willox, Chief Executive of the national employer association Ai Group said today.

“To help revive the tax reform debate, which has fallen down numerous rabbit holes over the years, Ai Group has today released a pre-election statement outlining priorities that could guide a review of our taxation, transfer and intergovernmental financial arrangements.

“These arrangements are a brake on Australia’s capacity to capitalise on our economic and social opportunities and add unnecessarily to the cost of living and the costs of doing business.

“There is considerable capacity to boost the efficiency, simplicity, sustainability, fairness and competitiveness of taxation while at the same time improving the transparency and accountability of government and the quality and productivity of public sector services.

“Currently, the scope for improving our approach to taxation is constrained by political timidity, entrenched positions and widespread misapprehension. These barriers point to the need to build understanding and support and expand the boundaries of acceptable reform.

“As a starting point, the general direction of change should involve the removal of the worst taxes and improving the efficiency and simplicity of the less burdensome taxes. The changes should ensure fairness so that system-wide redistribution, including through the transfer system, is retained but financed with less recourse to high rates of tax at moderate levels of personal income.

“Accordingly, the next government should back national efforts to lift community-wide understanding of the options available and the scope for trade-offs, including through adjustments to intergovernmental financial arrangements and changes to Australia’s extensive income support arrangements.

“Simultaneously, the federal government should bring together the states and territories to develop actionable approaches to the progressive remodelling of taxation and intergovernmental finances,” Mr Willox said.

Ai Group’s full pre-election statement on tax arrangements is available here.

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