The Government must deliver a credible plan to bring balance to the tax system and avoid unnecessary cuts in the Mid-year Economic and Fiscal Outlook (MYEFO) due today.
The Government’s continued denial of a revenue problem is leading them towards a culture of cuts when what we need is a plan for growth that is based on good jobs with decent wages and conditions, strong investment in skills and training and a tax system that ensures everyone pays their share.
We don’t need cuts to services, jobs, education and health; what we need is urgent tax reform to close loopholes that cost the Australian tax system billions of dollars.
Australia is a low taxing country, third lowest amongst OECD countries, with total tax revenue as a percentage of GDP at 27.3 per cent, well below the average of 35.5 per cent.
There also continues to be a level of tax avoidance that, if repaired, could address many budgetary concerns without the need to raise GST, cut services or shift a greater onus of responsibility onto workers.
Suggested areas of tax reform to address budget revenue shortfalls:
– It is estimated that if all ASX200 companies paid the full rate of company tax, the Federal Budget could have an additional $8.4 billion each year;
– Australia’s oil and gas industry have amassed more than $156 billion in Petroleum Resource Rent Tax (PRRT) credits. Due to PRRT loopholes, this massive increase in profit will not result in any additional tax revenue being collected by the Government;
– In 2011/12, there were 75 Australians who earned more than $1 million and yet declared an average taxable income of only $1.09 by taking advantage of complicated tax minimisation strategies;
– Half of all negative gearing tax breaks go to the top 20% of income earners;
– Almost 75% of Capital Gains Tax breaks go to the top 10% of income earners;
– A third of Superannuation tax breaks go to the top 10% of income earners.
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