Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

I would like to thank the member for Curtin for raising this issue and I acknowledge the work of the member for Wentworth and others in this place. They have drawn attention to the need for broad taxation reform. We all pay taxes, sometimes grudgingly, but we recognise that tax is necessary and important to fund quality public services and support a robust economy. But a good taxation system must be fair, efficient and simple. However, our taxation system fails on all three of these basic measures. Unfortunately, our two-party system makes it difficult if not impossible for extensive taxation policy reform to occur, as both sides use this as a political weapon. We are witnessing this at the moment with respect to the stage 3 tax cuts and that legislation.

Australia has a relatively low tax revenue as a percentage of GDP. In 2021, it ranked 30th out of 38 OECD countries at 29.5 per cent compared to the OECD average of 34.2 per cent. However, of the tax that we do collect, more than 60 per cent is collected from personal and corporate tax. This is approximately twice the OECD average and one of the most inefficient ways to collect tax.

This week, the stage 3 tax cuts legislation will be debated, and, while I support the changes, I don't think they go far enough. The median weekly income in Australia is $1,300 and attracts a tax rate of 30 per cent. For the equivalent earnings in the United States, it's a mere 12 per cent. Our top tax bracket under stage 3 is imposed on incomes exceeding $190,000, with a tax rate of 45 per cent, plus the Medicare levy. In contrast, the top tax bracket in the United States is only 37 per cent, which applies to incomes exceeding $890,000 when converted into Australian dollars. The top tax rate in the UK is 45 per cent. That kicks in at incomes of over $240,000. In New Zealand, their top tax rate is 39 per cent, and that's for incomes over NZ$180,000, which is comparable to Australian dollars. Canada has a top tax rate of 33 per cent for incomes over $235,000—again, our dollars are near parity.

Most advanced economies maintain a high reliance on consumption tax, which is acknowledged as one of the most efficient and sustainable taxes to governments, hence any tax reform should be predicated on reducing our reliance on inefficient taxes and increasing the revenue raised by efficient taxes. Such a reform would improve productivity and increase employment.

The question of fairness appropriately arises when proposing reforms, none more so than for taxation, particularly around consumption taxes such as the GST, which, to some, are considered regressive. However, consumption taxes capture a greater share from those with a capacity to purchase, and the perceived regressive components can be managed through more aggressive reductions in income tax thresholds for low- to middle-income earners and/or other assistant measures, particularly for age pensioners.

The third component of a good taxation system is simplicity, and this is not a word that describes our taxation system, with its more than 10,000 pages of tax law. An overly complex taxation system increases compliance costs for small businesses and microbusinesses and requires more individual taxpayers to resort to the use of tax agents for end-of-year returns. As a country, we benchmark ourselves against the OECD, and it is demonstrably clear that, on taxation matters, Australia performs poorly against other OECD nations.

Every Australian and enterprise benefits from improved productivity and increased employment opportunities. To succeed in this, we need a fairer, more efficient and simpler tax system. Taxation reform is required with urgency, and it must be devoid of political pointscoring so that necessary reforms can be made in the interests of the country and not just one side of politics.

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