If you get a spare 11 minutes today, check-out the above excellent video interview on ABC’s The Business with Paul Abbey, partner at Price Waterhouse Coopers (PwC).
In the interview, Abbey explains in great clarity the need for fundamental tax reform – both to restore the Budget back to long-run health and to boost the nation’s productivity. Key points from the interview include:
- Without reform, Australia’s public debt to GDP ratio will eventually hit 100%.
- Australia’s Budget is no longer strong enough to see through another GFC-like event with stimulus.
- Most of the sound thinking on tax reform has already been completed with the Henry Tax Review. All that is now required is implementation.
- The tax base needs to shift towards more efficient taxes, including consumption taxes (e.g. GST), land taxes (in place of stamp duties), and broad-based resource rent taxes (in place of less efficient royalties).
- Bracket creep is highly regressive as it penalises lower incomes the most. Broad-based tax reform is, therefore, required to assist both equity and Budget sustainability.
- All parts of the community – older Australians, the mining industry, etc – are going to have to compromise and contribute in order to deliver the government services that we all want to enjoy.
As I noted earlier this morning, if the Government was truly interested in boosting productivity and living standards, as well as seeing Australia through the unwinding of the mining boom and population ageing, it would place genuine tax reform high on its “to do list”, rather than taking temporary patchwork actions to plug immediate Budget holes.
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