Over 150 participants and another 46 observers will convene in Canberra on October 4-5 for a “Tax Forum”, Wayne Swan announced this morning, releasing a discussion paper intended to guide debate.
The government paper is driven strongly by the employment challenges of a booming economy — rather a contrast with the 1985 tax summit, held in the shadows of 8%-plus unemployment — and has a strong focus on workforce participation and employee mobility. The priorities identified in the paper, which is structured to address personal tax, transfer payments, corporate tax, state taxes and environmental and social taxes include:
- the perennial issue of encouraging workforce participation, particularly around effective marginal tax rates for low-income earners, especially regarding the Low Income Tax Offset;
- whether there is adequate support for people to relocate for employment;
- means of improving efficiency in the housing market;
- improving rules for superannuation during drawdown phase; and
- removing unintended or inappropriate tax concessions.
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- Reducing disincentives to workforce participation in transfer payments;
- Considering whether income support reflects modern patterns of work life; and
- Identifying links between public housing provision and participation
- reform of business taxes to address the mining boom and Asian growth;
- opportunities to lower the corporate tax rate; and
- reducing the small business compliance burden.
- addressing disincentives to employee relocation (presumably this is targeted at stamp duty, though it isn’t stated);
- replacing stamp duties with better land taxes;
- dumping insurance taxes;
- payroll tax harmonisation; and
- GST sharing and incentives for states to improve the efficiency of their taxes.
Environmental and social taxes:
- linking road charging to user impact;
- linking road charging to congestion; and
- impact of tax concessions and “other tax arrangements” in “unintended incentives for adverse environmental outcomes”.
As the above list suggests, the only tax cut clearly identified as up for grabs is the corporate tax rate, with Australia having one of the highest corporate tax rates in the OECD. However, the paper also puts on the table the long-running problem of tax concessions, which consume tens of billions of dollars a year in foregone revenue, by inviting suggestions on “unintended or inappropriate concessions” under each category that could be removed to fund other reforms.
And the addition of a congestion tax — sure to elicit an hysterical reaction from sections of the media — marks the first serious opportunity for one of the most overdue infrastructure reforms in the country to be considered, although carriage will ultimately be in the hands of state governments.
The participants will be balanced between community participants (32), chosen by community groups and NGOs themselves, business participants (32) selected by industry peak bodies, 13 ACTU representatives, seven representatives from different sections of the superannuation industry, federal government ministers and some backbenchers, including economist Andrew Leigh, all of the crossbenchers including Tony Crook and DLP senator John Madigan, and two Greens; representatives of key federal agencies including the ATO, the Board of Taxation and the Productivity Commission, state and territory premiers and treasurers, local government reps, the Henry Review team and the members of the current GST review team. There’ll also be an expressions-of-interest process for the public and students who want to attend as observers.