Andrew Leigh (Fraser, Australian Labor Party) Share this | Hansard source

It was my pleasure last week to participate in the Australian government's tax forum, a forum designed to continue the important conversation about how to build a better taxation system in Australia. This forum, of course, does not sit in isolation. This government commissioned a once in a generation taxation report in 2009. The Henry review reported back with a range of important recommendations which this government is pursuing. In my own submission to the tax forum, I argued that among the core principles for tax reform should be the following: taxes should be shifted from mobile tax bases to immobile tax bases, taxation of savings should be more neutral and sustainable, polluters should internalise the social cost of environmental damage, disincentives to labour force participation should be reduced, and the tax system should be as simple as possible.

The Gillard government is delivering on each of these priorities. We are cutting business investment taxes and introducing a mining tax. We are increasing the compulsory superannuation contribution rate. We are putting in place a carbon price with the historic vote in the House of Representatives today, and we are reforming the fringe benefits tax regime on cars to remove the incentive to drive excess kilometres. We are reducing disincentives to labour force participation by phasing out the dependent spouse tax offset and simplifying the tax system by tripling the tax-free threshold—taking one million people out of the tax filing system—and replacing the ineffective entrepreneurs tax offset with more straightforward measures, such as an improved instant asset write-off.

There was a serious and substantive discussion of tax reform at the forum—not including the sorts of comments that we heard from the member for Bradfield, who claimed that Australia is a heavily taxed nation. That is an odd contribution for two reasons. The first is that the tax take has fallen over recent years. The second is that, even when it was higher than it currently is under the former Howard-Costello government, the then Treasurer, Peter Costello, was reported as saying that Australia was a lightly taxed country, one of the most lightly taxed countries in the OECD. So it is clear that whether or not Australia is a heavily or lightly taxed country for those opposite depends more on which party is in power than actually looking at the hard statistics.

There was a range of issues canvassed at the forum. There was discussion over who bears the corporate income tax. Ken Henry persuasively argued, along with Greg Smith, another member of the Henry review panel, that ultimately the burden of the corporate income tax in a small open economy like Australia's falls on labour. There was a discussion of the treatment of losses and potentially a shift towards an allowance for corporate equity. A working group that will look into that issue has come out of the forum. There was discussion of federal-state tax reform and many of the inefficiencies caused, particularly in an economy in which we want to encourage workers to move to the most productive industries and regions, and the discouragement to mobility caused by state and territory stamp duty. There was discussion about the challenges in Australia in which people face volatile shocks caused by natural disasters or changes in circumstances and the fact that state and territory insurance taxes discourage people from taking up insurance.

There was also a discussion about the importance of simplifying the personal tax system, an issue I have written on as an ANU professor: arguing that the government should do everything it can to try and ensure that to the largest extent possible we take people out of the system. It should not be the case that three-quarters of Australians require professional help to file their return. The government's tripling of the tax-free threshold, moving a million people out of the tax-filing system, is critically important. I also commend the decision to fund an independent Tax Studies Institute and would encourage people to donate to the institute.

Finally, I would like to pay particular tribute to the academics who attended the tax forum. Many others who were representing interests were being paid for so doing. That was not the case for the academics and tax experts. I would like to pay particular tribute to Sue Richardson, Saul Eslake, Nicholas Gruen, Harry Clarke, Alan Duncan, John Freebairn, Deborah Cobb-Clark, Chris Evans, Peter Whiteford, Frank Stillwell, Dale Pinto, Ric Simes, Judy Yates, Flavio Menezes, Kerrie Sadiq, Richard Eccleston, Paul Gerrans, Robert Carling, Ross Garnaut, Ian Winter, Bruce Cohen, Graeme Cooper, Richard Highfield, Ann O'Connell, Miranda Stewart and Neil Warren for their participation in the forum. (Time expired)

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