Nuisance Tax Reform
There are numerous taxes which generate very little revenue for government but create substantial costs for business and individuals in terms of compliance. Alan proposes to eliminate these taxes and offset them with modest raises on international property owners.
The orange wedge in the chart above includes almost one hundred separate taxes, duties, excises and fees levied by the government upon Australian businesses and individuals.
The nuisance taxes make up approximately one third of this orange slice, accruing revenue of ~$30 billion*. However, compliance costs tax payers an additional $40 billon. This $40b is not revenue for the government. It is economic activity wasted on planning for, and satisfying of ATO and other government regulations and requirements. Economic activity which could be put to more productive use.
Indeed, the Dept. of the Treasury admits this same problem. But neither the government nor the opposition is interested in solving it:
“A growing problem is the increased complexity and compliance costs in the tax system. Tax compliance costs are in the order of $40 billion per year. Reducing complexity requires change to tax design and governance practices.” ~Treasury white paper
* The $30b estimated to be generated by these nuisance taxes is misleading. For example, the excise on diesel and petrol fuels. This tax imposes a cost on businesses which reduce their profits and so is deducted from their company profits tax. Eliminating this tax is close to revenue-neutral for the government but will immediately reduce the cost of living for us and the fixed costs of business. Reducing the fixed costs of our businesses allows them to expand, to hire and to pay higher wages in order to attract the best people for those new positions. This competition for labour leads to real wage growth across the entire economy, not just the special interests picked by government to be the 'winners' or 'losers'.
Taxes like the fuel excise disproportionately affect lower income Australians as the cost of fuel comprises a larger portion of their budget. This is the opposite of the principle of fairness espoused by the Australian tax code.
Other nuisance taxes include sin taxes (like the numerous taxes on beer, the Wine Equalisation Tax - a whopping 29% tax on the value of wine in addition to the GST, and the ~$90/L excise on spirits and other alcohol) various federal resource rent taxes and the major bank levy.
The most significant problem with the major bank levy is not the tax on the financial sector. It is the moral hazard that comes with a government guarantee of a bail out. This tax should be repealed along with the promise of a bail out. The government must emphatically state that there shall be no bail out, warning our banks and other financial institutions not to over extend.
Property Tax Reform
International companies and individuals have been buying up substantial portions of the Australian properties market. This prevents many Australians from owner occupation and forces them into renting.
Taxes on rents, sales and other profits generated by property for international owners are often dodged by intellectual property right renting, debt shifting, and strategic price shifting by offshore parent companies. To minimise this problem today, and to eliminate it in the future, Alan proposes to restrict foreign ownership of property. This is standard practise in many countries around the globe and would make sense to adopt here as well.
Negative gearing tax offsets shall also be reduced or eliminated for international companies and non-citizen owners.
These changes would push foreign investment into productive ends that lead to long term economic growth and prosperity in Australia rather than mere rent-seeking activities for their short term profit and our loss.