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Oz Think Tank Calls For GST, Superannuation Reform

by Mary Swire, Tax-News.com, Hong Kong

07 July 2015


The Grattan Institute, a think tank, has said the Australian Government should broaden the goods and services tax (GST), reduce superannuation tax concessions, reform capital gains tax and negative gearing arrangements, and introduce a broad-based property levy.

According to the Institute, these reforms would "materially increase government revenue with limited collateral damage to the economy and the most vulnerable in society." The argument is made in a new working paper, "Fiscal challenges for Australia," co-authored by John Daley and Danielle Wood.

The paper acknowledges that the proposed changes would be "politically difficult." It suggests that the Government should adopt budget projection methodologies that provide a more realistic picture of the fiscal challenges Australia faces in the medium term. "These will make it more obvious that we cannot rely on the hope that our luck will improve. Tougher decisions are needed," the paper states.

The paper notes that bracket creep will increase average income tax rates for most middle-income workers. The authors calculate that a person earning AUD50,000 (USD37,900) a year will pay an average tax rate of 17.1 percent in 2015. This will increase to 19.1 percent in 2019. The authors point out that as average income tax burdens increase, the Government is "likely to face strong pressure to return some of the fiscal drag by changing the tax scales."

TAGS: tax | pensions | property tax | retirement | budget | goods and services tax (GST) | Australia | tax credits | tax rates | tax reform | individual income tax | services

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