It’s hard to imagine anything at all coming from tomorrow’s tax forum when we have a deeply unpopular minority government committed to a $47.7 billion budget turnaround within two years.
That means there is neither the political capital to increase taxes beyond the carbon tax and the MRRT, nor the fiscal room to reduce them.
The purpose of this week’s tax forum is, in fact, not to discuss and reform the taxation system, but to fulfil a clause in the agreement with Rob Oakeshott signed on September 7, 2010, by Julia Gillard and Wayne Swan, in which they promised to convene a “public forum of experts on taxation and its economic and social effects to discuss the Henry Review, with that meeting to be held before June 30, 2011”. Whoops, a bit late. Sorry about that, Rob.
I doubt that Rob Oakeshott cares much about taxation and the Henry Review. He was just looking for some demands to fill out his list so he could be seen as a tough negotiator during those glorious 17 days immediately after the 2010 election.
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Nevertheless, hope springs eternal: Treasury has received 165 submissions from participants in the tax forum and others, documents that cover the full spectrum of naked self-interest and doe-eyed idealism, and no doubt more or less repeat what each of them wrote to the Henry Review.
The Henry Review contained 138 recommendations that amounted to a blueprint for reform of the tax system for decades to come. Twenty-nine of those have now been rejected by the government and 10 accepted — 99 to go.
But a series of speeches at a two-day public symposium is not the way to deal with them, even if we had a popular government with control of both houses and a solid budget surplus to play with. It is through systematic prioritisation by independent experts working with Treasury and the ATO.
For that reason, the one Henry recommendation that can and should get up this week is No.134: “The government should support one or more institutions to undertake independent policy research relevant to the Australian tax and transfer system.” It was supported in a submission to the Tax Forum signed by 20 academics calling for the establishment of The Australian Centre for Tax Research.
A few submissions noted that Australia’s tax system is tilted against work and savings, and that wealth is not taxed enough. The Henry Review stayed away from death duties, or bequest taxes, but did recommend a land tax. But even though we have a Labor government, land and wealth taxes are out in Australia, as are increases in the GST rate.
I’m willing to bet that the only tax reforms this government will undertake during the rest of its term have already been announced: the taxing of greenhouse gas emissions along with the redistribution of the proceeds, and the MRRT.
*This article was originally published at Business Spectator