A LEADING tax expert is calling for an urgent national coronavirus taxation summit to help reform Australia’s outdated tax system and ensure the nation can better deal with the economic fallout of COVID-19.
Prof Robert Breunig from the Australian National University’s Tax and Transfer Policy Institute says a national taxation summit could clearly and publicly map out the costs of not undertaking reform as well as suggest a realistic reform path.
“Why not reform our outmoded and outdated tax system? Not only is it ill-equipped for the 21st century, but it is inefficient, complex and unfair; it doesn’t reflect contemporary Australia; and is not going to generate sufficient revenue in the short-term,” he says.
“We already know that we are facing a mountain of new debt because of the COVID-19 pandemic. And we are hoping for a quick and robust recovery but Australia’s recovery through global trade will continue to be impeded by other countries’ response to the coronavirus. And our interest rates will continue to be low. So we need to think big when it comes to fiscal policy.”
According to Prof Breunig there are a range of challenges that need to be urgently addressed, which include a reliance on income taxes to raise the bulk of revenue.
“Because incomes are taxed heavily, and savings lightly, it means young workers subsidise the old, who disproportionality own capital,” he says.
“It also means less revenue overall, as income tax is subject to numerous deductions and exemptions for people who derive income from certain assets.
“Clearly the system needs to change, and now presents a perfect opportunity. Given the current spirit of bipartisanship evidenced in the passing of pandemic legislation and the formation of a cross-party, state and federal unity government, there is a golden moment to seize.
“Our political leaders can take this crisis and move us together towards a fairer and better Australia.
“If we can effectively reposition the tax and transfer systems, we will be able to restart the economic engines in a more sustainable manner. One that better corresponds with our post-coronavirus ambitions as a country.
“The question now is; will our leaders take this once-in-a-generations chance while they have it?”