Hot on the heels of Per Capita’s 2012 tax survey, which found that Australians have become simultaneously more averse to paying tax but also want greater government investment in essential social services, Senator Doug Cameron has come out today requesting that the Government raise taxes and improve budget efficiency in order to boost spending on essential services. From the Australian:
Senator Cameron has challenged his party’s leadership to tax super contributions of higher income earners at a higher rate, crack down on trusts, raise the mining tax, and introduce other taxes to pay for social welfare initiatives.
The Senator says we have a low tax to GDP ratio and the Government needs to increase it by 0.7 per cent.
“I can’t understand why it’s a badge of honour for a Labor government to have a lower tax to GDP ratio than the Howard Government.”
“A mere 0.7 per cent increase in the ratio of tax to GDP would raise sufficient ratio for us to realise our aspirations to be a good society”.
He said even if we did increase the taxation share we would still mean we would be the fifth lowest taxing country in the OECD.
“It is high time we withdrew from what seems like some sort of international virility contest where those who tax the least win regardless of the cost to the social fabric.”
“My party should change its position on increasing the Newstart Allowance”
He said the Federal Budget contains “waste.”
On top of raising the mining tax which he argues is not making enough money, he says a range of taxes should be hiked.
He says he backed a “financial transaction tax” which European countries are introducing.
“Many countries in Europe are implementing a modest financial transaction tax which has the potential to raise a significant amount of revenue for a government.”
He said “private discretionary trusts” are being used by high wealth individuals to minimise tax and conceal assets.
He also wants a superannuation tax crackdown to fund his big social spending initiatives including Gonski and a Newstart increase.
“I think the time has come for a reappraisal of the tax concessions which arguably act as a device to minimise the personal income tax of high wealth individuals. Many of these tax concessions are deeply entrenched and will be politically difficult to get rid of.”
While Senator Cameron’s request is likely to be brushed aside by both sides of Parliament, his comments about excessive budget waste and tax avoidance by the wealthy are on the money.
Arguably, tens-of-billions of dollars of revenue could be saved (or raised) by, amongst other things, winding back various subsidies to the housing market (e.g. first home buyer grants and negative gearing), by reforming superannuation concessions (e.g. by replacing the 15% flat tax with a 15% marginal tax rate concession), by reducing duplication and waste across bureaucracies, and by making the banks pay an explicit insurance premium for government backing.
Broadly, the Government should look more at improving the functioning of the existing tax and expenditure system rather than looking to add multiple new layers.
