The pressure is intensifying for a wholesale shakeup of Australia’s tax system.
Powerful lobby groups ranging from The Australian Council for Social Services to the Business Council for Australia are all demanding reform. They say the economy is being held back by too many taxes and high compliance costs, while an ageing population is also increasing demand for change.
Ambitious plans under consideration include an end to the current tax-free threshold, an increase in tax rates for every AU$1,000 (US$713) of income earned and the taxation of savings, according to The Sydney Morning Herald. Other possibilities include increasing the Goods & Service Tax base, introducing death taxes and moving away from stamp duty in favour of a land tax.
Despite the country’s present tax arrangement being described as “a 20th century tax system”, previous attempts at reform have been shelved by both the Coalition and Labour governments. Although there are more than 125 taxes at both state and federal level, 90% of tax revenue is raised through just 10 of them.
But those in favour of major change point to the fact that the Australian Budget is edging towards surplus, giving the government more flexibility to tackle radical reform.
The frontrunner in terms of proposals for how to go about it is an ambitious plan put forward by accountancy firm, PricewaterhouseCoopers. The scheme would result in every dollar earned being taxed and an end to the tax-free threshold for earnings under AU$20,000 (US$14,257).
The billions of dollars generated in extra revenues would go to low-income earners via welfare and low-income tax offsets. The proposed changes would also prevent people from earning AU$100,000 (US$71,287) or more each year taking advantage of the tax-free threshold.
A similar system has been in place for more than 20 years in New Zealand.
Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.
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The pressure is intensifying for a wholesale shakeup of Australia’s tax system.
Powerful lobby groups ranging from The Australian Council for Social Services to the Business Council for Australia are all demanding reform. They say the economy is being held back by too many taxes and high compliance costs, while an ageing population is also increasing demand for change.
Ambitious plans under consideration include an end to the current tax-free threshold, an increase in tax rates for every AU$1,000 (US$713) of income earned and the taxation of savings, according to The Sydney Morning Herald. Other possibilities include increasing the Goods & Service Tax base, introducing death taxes and moving away from stamp duty in favour of a land tax.
Despite the country’s present tax arrangement being described as “a 20th century tax system”, previous attempts at reform have been shelved by both the Coalition and Labour governments. Although there are more than 125 taxes at both state and federal level, 90% of tax revenue is raised through just 10 of them.
But those in favour of major change point to the fact that the Australian Budget is edging towards surplus, giving the government more flexibility to tackle radical reform.
The frontrunner in terms of proposals for how to go about it is an ambitious plan put forward by accountancy firm, PricewaterhouseCoopers. The scheme would result in every dollar earned being taxed and an end to the tax-free threshold for earnings under AU$20,000 (US$14,257).
The billions of dollars generated in extra revenues would go to low-income earners via welfare and low-income tax offsets. The proposed changes would also prevent people from earning AU$100,000 (US$71,287) or more each year taking advantage of the tax-free threshold.
A similar system has been in place for more than 20 years in New Zealand.
Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.
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Australia loses AUS$8bn annually in undeclared income tax
Australia's tax system revealed
Tax Justice Network Australia reveals country's worst tax dodger
