Last week we saw the government host the Tax Forum to discuss possible changes to our taxation system overall. Interestingly, they didn’t include for discussion any of the new taxes they want to introduce, such as the carbon tax (now passed in the Lower House) or resources tax.
And the other main tax that affects us all, GST, seemed to be off limits as well.
So what was the purpose of a tax forum if you can’t actually discuss all taxes? And what outcomes were they really hoping for in two days?
If the politicians of this country were serious about taxation reform then they should make more of a serious effort than only two days to sit down and take the opportunity to develop a real vision for our future. Oh sorry, that was what the Henry review was for.
Taxes we pay
When the forum first started it was reported that 10% of the taxes in this country collects 90% of the taxes. So my question is why do we have 90% of the other taxes and what is the cost for collecting such taxes.
Government departments get too focussed on the principal of why they collect the taxes and not the actual outcomes of how the taxes are affecting us as a community. If the costs for such collection are offsetting the collection, then what is the point? After all, the collection of taxes is supposed to be the good of the community.
So using those statistics, if the governments eliminated up to 50% of those superfluous taxes they would only miss out on 5% of the total revenue. What could such savings from the payers in the community actually give back to the community? If only our governments could have such vision.
And if they were so concerned about the loss in revenue, surely they could recover that lost revenue from the other remaining taxes. Wayne Swan’s focus was that tax reform should be revenue neutral.
So why not consider a broader based tax system that removes layers of complexity that still delivers the levels of taxation revenue required but actually cuts costs for the community at large. The simplest way of doing this is using the GST platform. It’s a fairer way of taxing as it is based on our consumption and it gives us a choice to save.
This way, taxes such as payroll tax, which is a disincentive tax, could be removed.
So what other taxes would you like to see removed?
After all, taxes just add to the costs of doing business and ultimately the consumers all pay, so why not tear away the hidden taxes and make the actual tax being paid, more transparent.
It’s going to take a government with a clear vision and a mandate to accomplish such changes and it will involve all levels of governments. Will we ever see a fair and competitive tax system in this country in our generation? We can only have hope.
©2011 Michelle Gargar