Tax isn’t a sexy topic, but Treasurer Wayne Swan’s two-day tax forum produced a few ideas worth getting excited about. These include hiking the tax-free threshold, a timeline to harmonise state taxes, a crackdown on foreign workers getting tax-free living-away-from-home treatment, examining tax loopholes such as negative gearing and a new think tank on tax reform.
The government’s first priority is to raise the tax-free threshold to $21,000 (it sits at $6000). The change means 1.2 million people will be exempt from paying tax, writes Phillip Coorey in The Sydney Morning Herald, but there is no set timeline on the change. It will be down when it is “affordable”, said Swan.
David Crow in The Australian Financial Review set the scene nicely:
“The scars of last year’s mining tax row were all too obvious in Canberra yesterday as a disjointed conversation about the tax system ended with modest commitments that might one day lead to change.
Agreement on reform was never likely at a tax forum set up by a reluctant government to hear from leaders who tended to restate their positions to an audience that knew them already.”
Former Treasury secretary — and chair of the recent comprehensive tax review — Ken Henry yesterday told the forum that tax needed to be publicly debated in a serious way.
“The point that reforms should not be pursued as one big bang package is worth reprising on an occasion such as this,” said Henry. “More important is the general point that good policy outcomes are more likely when there has been a high-quality debate.”
The changes outlined by Swan were small but critical, says Michelle Grattan in The Age:
“Wayne Swan entered the final session of the summit with a small basket of policy presents, determined that the participants should leave, if not satisfied, at least with something.”
Some genuine tax reform is happening right now in Australia, but it’s mainly thanks to the Prime Minister rather than the Treasurer, writes George Megalogenis in The Australian:
“The Prime Minister is becoming more confident with the notion that reform begins with the airing of dangerous ideas. But the Treasurer is still prone to talking like it is last year, telling people what he won’t be doing.”
But David Uren can’t find a tax hero anywhere. He writes in The Australian: “No reform prospers without champions, without politicians who are prepared to argue it up hill and down dale. They are nowhere to be seen.
Regardless, it’s important to have these kind of events. “Summits and forums may have a bad reputations but in an age when policy doesn’t get much of a look-in, we need them more than ever,” notes Laura Tingle in The Fin Review.